By Elizabeth Leclaire
ASEAN countries have continued to gain economic footholds in the global market, particularly in the automotive industry. Automobile manufacturing and production has skyrocketed in recent years, most notably in Thailand, Indonesia, Vietnam, and Malaysia. Although these ASEAN nations have all focused on automotive industry development, the particular economic niches and consumer bases differ greatly between them. This article will outline the primary differences between the markets and their implications on foreign investors looking to invest in Southeast Asia.
In this issue:
- Outlook on ASEAN Investment 2015
- Key Industries for Investment in ASEAN
- Opportunity in the ASEAN-India Free Trade Area
New targets were set for promoting trade between ASEAN and its partners this week at the 46th ASEAN Economic Ministers Meeting (AEM) in the Burmese capital of Nay Pyi Taw. The four-day meeting specifically focused on the implementation of free trade agreements (FTAs) between ASEAN and East Asia, as well as the removal of non-tariff barriers to trade—identified as a major stumbling block for unlocking growth in the region.
In his opening address, Myanmar President U Thein Sein reiterated the need to meet the targets specified in the ASEAN Economic Community (AEC) Blueprint, which were said to currently stand at 82.1 percent fulfillment. Thein praised the recent launch of negotiations on an ASEAN-Hong Kong FTA, and stated that Myanmar is prioritizing the development of SMEs as a means to narrow the inequity gap between ASEAN nations.
Op-Ed Commentary: Chris Devonshire-Ellis
The most recent FDI data from the World Bank shows that China and the larger ASEAN nations have performed well the past 18 months in terms of generating increased foreign direct investment. The data, which covers 2013 figures in total, show a 17.7 percent overall increase in FDI for China, yet an even more impressive 20.4 percent for the Philippines and 19 percent for Malaysia. The Philippines data may seem overly strong given the much publicized spat with China over disputed islands, yet this has clearly, as was stressed at the time, not manifested in a slowdown of investment. Both the Philippines and Malaysia remain strong destinations for Chinese as well as other foreign investment.
Going into the second half of 2014, office rental around Asia continues on the up and up, though analysts are cautious about the effect of the slowing Chinese economy on the rest of the region, according to a recent report.
On the back of rising economic sentiment and tightening supply, prime markets in Hong Kong, Singapore, Tokyo and Bangkok saw solid rental growth in both price and volume, according to the Q2 Asia Pacific Prime Office Rental Index by Knight Frank.
After years of strengthening economic relations, Taiwan and the Philippines are expected to continue experiencing increasing amounts of bilateral trade, according to Taiwan’s Ministry of Economic Affairs, with trade volume between the two countries doubling from US$6.05 billion in 2009 to nearly US$12 billion in 2013.
Current figures make the Philippines the seventh largest export destination for Taiwan, as well as its 11th largest trading partner. Conversely, Taiwan is the fifth largest source of imports and 11th largest destination of exports for the Philippines.
In 2012, trade between the two countries totaled US$6.8 billion. The Philippines exported US$1.94 billion in goods to Taiwan, while imports from Taiwan stood at US$4.86 billion.
By Matthew Zito, Dezan Shira & Associates
Located at the heart of Southeast Asia, this successful and highly developed free-market economy offers a host of opportunities to investors. The cultural melting pot that is Singapore has been referred to as one of the most business-friendly and competitive economies in the world, and for good reason.
Consumers in Asia-Pacific are the most socially conscious shoppers in the world, according to a new Nielsen report.
The Nielsen Global Survey of Corporate Social Responsibility polled more than 30,000 consumers in 60 countries around the world in February and March this year in order to understand which consumers are the most supportive of socially responsible actions, which social issues are concerning these consumers the most and how sustainable practices influence consumers regarding purchasing decisions.
DELHI – Following an election campaign which was largely absent of foreign policy, Modi has surprised many by spending his first few weeks in office focusing on India’s foreign relations, a decision which is being driven by the need to fix India’s economic problems.
With their landslide victory last month, the Bharatiya Janata Party (BJP) inherited an economy struggling from high inflation, a falling rupee and a drop in both industrial production and foreign investment. The election of Modi, a relative hardliner who has the reputation of being business-friendly and decisive, was a clear message from voters to fix the sputtering Indian economy.
But problems could flash up and some countries have longer term issues.
Op-Ed Commentary: Chris Devonshire-Ellis
With China becoming embroiled in increasing numbers of regional tensions, the operational risks for foreign investors in a number of these countries should be assessed. Recent riots in Vietnam for example, while going completely unreported in China, have hit the headlines in the West, while Hong Kong Shippers’ Council chairman Willy Lin Sun-mo has said that Hong Kong manufacturers based in the Pearl River Delta are running out of alternative, low-cost factory locations elsewhere.
The issue, especially as many foreign manufacturers are looking at nearby low-cost manufacturing locations, is key to businesses faced with rising China labour costs. The Chinese middle class consumer market is expected to increase by 350 million people over the next seven years, and that additional manufacturing capacity to service them is increasingly being placed elsewhere. This is especially true in light of the China-ASEAN Free Trade Agreement, which impacts upon many countries, including Vietnam, reducing customs tariffs on thousands of products to zero.