GCC and ASEAN: Nurturing two regions’ success

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The GCC, especially Qatar, is a brilliant example for the results of the global economic shift that has embraced the world since the financial crisis of 2008. With investors losing their confidence in traditional markets and even the traditional financial system, new regions have emerged successfully and are now the new hot spots on the global business radar.

By Arno Maierbrugger

Besides the GCC, one other such region is the Association of Southeast Asian Nations, or ASEAN, comprising of ten excitingly and rapidly growing countries aiming to become one of the new hubs of the world’s economy.

The GCC has already realised this fact as in early January the Gulf countries and ASEAN extended their existing memorandum of understanding on an action plan that commits both regions to enhanced cooperation in trade and investment, economic and developmental cooperation, education and training, culture and information, as well as mutual consultation in international matters. On this occasion, GCC Secretary-General Dr. Abdul Latif Al Zayani recognised “the pivotal role that the economically vibrant region [of ASEAN] will play in global growth.”

One example for an expected vibrant future collaboration is the financial services sector. Sukuk issuances from Qatar are already attracting interest from China and will do so in ASEAN countries in the years to come, as financial pressures rise in the region from increased infrastructure spending. With the boom of a large number of entrepreneurial ventures that have been established in the wake of the region’s rapid economic growth, fresh venture capital and private equity has become highly sought after in Singapore, Thailand and Malaysia, just to name a few.

Thailand, for instance, has set itself the goal to become ASEAN’s fundraising and investment hub as it becomes increasingly successful in convincing foreign companies to raise funds through Thai bond and stock markets. A lot of IPOs are in the pipeline in ASEAN over the next two years, and all this makes it attractive for GCC investors to “offload” their cash surplus in a booming destination with forecast growth rates between 5 and 7 per cent annually. For example, the yet underdeveloped, but high-potential country of Laos has just announced it will issue its first foreign currency bond in its history to boost infrastructure development, and more are to come. It has been acknowledged by financial analysts that a Laos bond at the moment would hold a lot more prospects for investors and would be even safer than bonds issued by ailing European economies.

On the other hand, Qatar holds a lot of opportunities for ASEAN investors, given the fact that the nation will spend a noticeable amount of money on future projects in infrastructure, tourism and gas exploration. The Malaysian government has already called on its investors, contractors and businessmen to invest in the country and sees great opportunities for project management firms, engineering contractors and construction companies.

In the oil sector, Qatargas and Thailand’s oil giant PTT have just signed a contract on liquefied natural gas delivery to the Southeast Asian kingdom over 20 years at an annual volume of 2 million tonnes, which will most likely boost the bilateral economic relations between the nations in related sectors.

The governments of Thailand and Bahrain in November 2012 have set up a joint steering committee to boost food and energy security as well as increase bilateral investment. Bahrain is planning to establish silos in Thailand to store food, such as rice, which would be purchased from Thailand to improve food security in the Gulf country. In turn, Thailand will set up a commodity distribution center in Bahrain. The Gulf island nation has also said it will send more businessmen to Thailand to improve capital investment and intensify their cooperation in the area of health tourism.

Qatar Airways has said it will expand further into Southeast Asia on the back of rising demand for flights between ASEAN and the GCC. Only recently, Myanmar’s capital Yangon has become the 10th gateway for Qatar Airways in ASEAN, following on from successful operations to Kuala Lumpur, Bangkok, Bali, Ho Chi Minh City, Jakarta, Hanoi, Singapore, Manila and Phuket.

It is clearly the time to invest in ASEAN. The bloc has decided to grow together to a single market of 600 million consumers by 2016, linked by a free trade area to create a free flow of goods and services. The GCC, and Qatar, will have to look east and seize this opportunity.

This comment is one of Inside Investor’s monthly contribution to Qatar’s leading business magazine Qatar Today.

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Reading Time: 3 minutes

The GCC, especially Qatar, is a brilliant example for the results of the global economic shift that has embraced the world since the financial crisis of 2008. With investors losing their confidence in traditional markets and even the traditional financial system, new regions have emerged successfully and are now the new hot spots on the global business radar.

Reading Time: 3 minutes

The GCC, especially Qatar, is a brilliant example for the results of the global economic shift that has embraced the world since the financial crisis of 2008. With investors losing their confidence in traditional markets and even the traditional financial system, new regions have emerged successfully and are now the new hot spots on the global business radar.

By Arno Maierbrugger

Besides the GCC, one other such region is the Association of Southeast Asian Nations, or ASEAN, comprising of ten excitingly and rapidly growing countries aiming to become one of the new hubs of the world’s economy.

The GCC has already realised this fact as in early January the Gulf countries and ASEAN extended their existing memorandum of understanding on an action plan that commits both regions to enhanced cooperation in trade and investment, economic and developmental cooperation, education and training, culture and information, as well as mutual consultation in international matters. On this occasion, GCC Secretary-General Dr. Abdul Latif Al Zayani recognised “the pivotal role that the economically vibrant region [of ASEAN] will play in global growth.”

One example for an expected vibrant future collaboration is the financial services sector. Sukuk issuances from Qatar are already attracting interest from China and will do so in ASEAN countries in the years to come, as financial pressures rise in the region from increased infrastructure spending. With the boom of a large number of entrepreneurial ventures that have been established in the wake of the region’s rapid economic growth, fresh venture capital and private equity has become highly sought after in Singapore, Thailand and Malaysia, just to name a few.

Thailand, for instance, has set itself the goal to become ASEAN’s fundraising and investment hub as it becomes increasingly successful in convincing foreign companies to raise funds through Thai bond and stock markets. A lot of IPOs are in the pipeline in ASEAN over the next two years, and all this makes it attractive for GCC investors to “offload” their cash surplus in a booming destination with forecast growth rates between 5 and 7 per cent annually. For example, the yet underdeveloped, but high-potential country of Laos has just announced it will issue its first foreign currency bond in its history to boost infrastructure development, and more are to come. It has been acknowledged by financial analysts that a Laos bond at the moment would hold a lot more prospects for investors and would be even safer than bonds issued by ailing European economies.

On the other hand, Qatar holds a lot of opportunities for ASEAN investors, given the fact that the nation will spend a noticeable amount of money on future projects in infrastructure, tourism and gas exploration. The Malaysian government has already called on its investors, contractors and businessmen to invest in the country and sees great opportunities for project management firms, engineering contractors and construction companies.

In the oil sector, Qatargas and Thailand’s oil giant PTT have just signed a contract on liquefied natural gas delivery to the Southeast Asian kingdom over 20 years at an annual volume of 2 million tonnes, which will most likely boost the bilateral economic relations between the nations in related sectors.

The governments of Thailand and Bahrain in November 2012 have set up a joint steering committee to boost food and energy security as well as increase bilateral investment. Bahrain is planning to establish silos in Thailand to store food, such as rice, which would be purchased from Thailand to improve food security in the Gulf country. In turn, Thailand will set up a commodity distribution center in Bahrain. The Gulf island nation has also said it will send more businessmen to Thailand to improve capital investment and intensify their cooperation in the area of health tourism.

Qatar Airways has said it will expand further into Southeast Asia on the back of rising demand for flights between ASEAN and the GCC. Only recently, Myanmar’s capital Yangon has become the 10th gateway for Qatar Airways in ASEAN, following on from successful operations to Kuala Lumpur, Bangkok, Bali, Ho Chi Minh City, Jakarta, Hanoi, Singapore, Manila and Phuket.

It is clearly the time to invest in ASEAN. The bloc has decided to grow together to a single market of 600 million consumers by 2016, linked by a free trade area to create a free flow of goods and services. The GCC, and Qatar, will have to look east and seize this opportunity.

This comment is one of Inside Investor’s monthly contribution to Qatar’s leading business magazine Qatar Today.

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