In this edition of ASEAN Business Briefs, we focus on some the broader regional concerns within ASEAN: demographics in Vietnam, continuing tariff pressure from the US, easing border tensions between Thailand and Cambodia and Thailand’s tourism blues.
Vietnam ends 2-child policy
Under a new regulation approved by the National Assembly Standing Committee in Hanoi last week, couples now have the right to decide how many to have, according to Bloomberg and other sources.
Vietnam’s limits on the number of children per family were introduced in 1988, but have come a subject of concern after 2022, when the birthrate dropped below 2.1 children per woman – the average required to maintain a stable population.
Japan, South Korea, Taiwan, Singapore and Hong Kong are all already in the grip of demographic squeezes, while Vietnam faces the possible dilemma of an aging population before it “gets rich.”
The concern? The policy change may come too late to meaningfully impact Vietnam’s demographic trajectory. Experience elsewhere in the region suggests that once fertility rates drop below replacement levels, they rarely recover even after restrictions are lifted. Vietnam now faces the challenge of supporting economic growth with a shrinking workforce while building social systems to care for its rapidly aging population.
US maintains tariff pressure on Vietnam
Amid claims from Thailand that tariff negotiations with the US are about to get underway (no date specified), Vietnam’s “goodwill efforts” – read weeks of bend-over-backwards concessions and diplomacy – seem to be so-far yielding little in return.
Last week the US secretary of Commerce indicated that the US would not be cutting Vietnam any slack on tariffs.
The US, Vietnam’s largest trading partner, is threatening a potentially crippling 46% tariff on Vietnam. The tariff is currently at 10% for 90 days to allow time for talks, but the US appears to be digging in, with Secretary of Commerce Howard Lutnick arguing last week that Vietnam needs to slash mports from China and reduce its trade deficit with the US.
“They buy $90 billion from China, then they mark it up and send it to us,” Lutnick said, according to a Bloomberg report. “So it’s just a pathway of China to us.”
Vietnam has agreed to buy USD 3 billion in US goods ahead of further tariff negotiations, but the US wants more due to its deficit of $123.5 billion, among the highest among its trading partners.
A Reuters report last week said that Washington is making “tough” demands on Vietnam and another reportbrings the bad news that Vietnam’s trade surplus with the US is up
Thailand, Cambodia border tensions ease
Thai and Cambodian forces returned to their former positions on the border over the weekend after a flare up of tensions that left one Cambodian soldier dead.
Politicians on both sides took the opportunity to drum up nationalistic spirits, but Cambodian forces have reportedly withdrawn from their post-clash positions, according to reports, with trenches filled in and the area restored to its prior state.
Both countries have agreed to weekly talks through the Local Border Committee to maintain peace and manage the disputed area sustainably, ahead of the Joint Boundary Commission (JBC) meeting scheduled for next Saturday.
According to reports at the time of writing, Thailand was imposing time limits on Cambodian visitors to Thailand, but business leaders in Thailand told The Nation newspaper that border conflicts are nothing news and that it was “busines as usual.”
both sides have announced, after the two governments reinforced their military presence following an eruption of violence that killed a Cambodian soldier.
Thailand’s tourism slump continues
Thailand’s tourism industry is experiencing its worst downturn since the COVID-19 pandemic, with foreign arrivals declining for four consecutive months through April. Overseas tourist numbers dropped 14% to 2.6 million last month, according to Thai Immigration data reported by Bloomberg.
The prolonged slump is hitting Thailand’s economy hard, with tourism accounting for approximately 12% of the country’s GDP. Chinese visitors, traditionally the largest nationality group, have been particularly absent – nearly one million fewer Chinese tourists have arrived this year compared to the same period in 2024.
Regional Asian travelers, who form the majority of Thailand’s tourist base, have declined by nearly 11% year-to-date through May. Flight booking data from China Trading Desk shows Chinese arrivals are expected to fall 15% during the peak summer months of June through August compared to last year.
The impact is already visible in hotel metrics. A survey of nearly 140 operators within the Thai Hotel Association forecasts occupancy rates will drop from 63% in April to 52% in May. Hotels are slashing room rates in the second quarter as they compete for fewer guests.
Safety concerns appear to be driving much of the decline, particularly regarding scam centers operating near the Myanmar border that have spooked Chinese travelers. The sustained drop heading into Thailand’s crucial summer holiday season has sparked alarm in a country heavily dependent on tourism revenues.
This represents Thailand’s longest streak of tourism declines since 2021, when international borders were closed due to the pandemic.