Roundup: ASEAN’s future looks bright

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ASEAN-economic-growth
The projection shows that ASEAN’s share of the entire Asian economy is growing strongly (Click to enlarge)

2012 was another good year for ASEAN economies, and 2013 is shaping up to be one as well. Despite a weak global economy, Thailand, Indonesia and the Philippines all reported strong GDP growth for 2012. Equity and bond markets did particularly well, benefiting from a flood of capital into the region.

ASEAN is becoming a new darling of the global powers as well. After his reelection last year, US President Barack Obama’s first overseas trip was to ASEAN, and Japan’s Prime Minister Shinzo Abe also went to ASEAN for his first journey abroad.

It was only 15 years ago, in 1997, when ASEAN went through a major economic crisis. That all seems like a distant memory, as the prospect of another economic crisis anytime soon seems dim. The question now is, rather, how high will ASEAN GDP rise.

A recent survey conducted by the Economist Corporate Network showed that, while India and China were ranked as the top places for corporate investment in the world, Indonesia, Malaysia, Thailand, Singapore, and Vietnam ranked just below them. Foreign direct investment (FDI) in ASEAN jumped by 26 per cent in 2011 to record levels, and the ASEAN share of total global FDI has returned to between 7 and 9 per cent, the previous high that it reached before the collapse of the 1990s.

One of the ways in which ASEAN is competitive with India and China is in the labour market. China’s economic miracle has largely been driven by manufacturing, as the country increasingly became the workshop of the world. The working age population in China, however, is declining and wages there are increasingly. As this happens, foreign corporations have started to move their manufacturing operations to places like Vietnam and Cambodia that have abundant working age populations and relatively low wages.

According to a recent US Chamber of Commerce (AmCham) report, US investors want to invest in regions that have economic stability, strong potential for growth, reliable infrastructure and high quality labour. Countries like Thailand fit this bill perfectly and thus it is little surprise they are booming. US companies currently employ more than 200,000 local workers in Thailand and have provided more than $45 billion in investments.

The AmCham report said that US investors want predictability in the regulatory environment as well as transparency in policy making. And, as manufacturing and services go up the value chain, what will be needed is greater availability of skilled labor. For the moment, however, foreigners have decided that ASEAN is a strong bet for their FDI.

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[caption id="attachment_12791" align="alignleft" width="300"] The projection shows that ASEAN's share of the entire Asian economy is growing strongly (Click to enlarge)[/caption] 2012 was another good year for ASEAN economies, and 2013 is shaping up to be one as well. Despite a weak global economy, Thailand, Indonesia and the Philippines all reported strong GDP growth for 2012. Equity and bond markets did particularly well, benefiting from a flood of capital into the region. ASEAN is becoming a new darling of the global powers as well. After his reelection last year, US President Barack Obama’s first overseas trip was to ASEAN, and...

Reading Time: 2 minutes

ASEAN-economic-growth
The projection shows that ASEAN’s share of the entire Asian economy is growing strongly (Click to enlarge)

2012 was another good year for ASEAN economies, and 2013 is shaping up to be one as well. Despite a weak global economy, Thailand, Indonesia and the Philippines all reported strong GDP growth for 2012. Equity and bond markets did particularly well, benefiting from a flood of capital into the region.

ASEAN is becoming a new darling of the global powers as well. After his reelection last year, US President Barack Obama’s first overseas trip was to ASEAN, and Japan’s Prime Minister Shinzo Abe also went to ASEAN for his first journey abroad.

It was only 15 years ago, in 1997, when ASEAN went through a major economic crisis. That all seems like a distant memory, as the prospect of another economic crisis anytime soon seems dim. The question now is, rather, how high will ASEAN GDP rise.

A recent survey conducted by the Economist Corporate Network showed that, while India and China were ranked as the top places for corporate investment in the world, Indonesia, Malaysia, Thailand, Singapore, and Vietnam ranked just below them. Foreign direct investment (FDI) in ASEAN jumped by 26 per cent in 2011 to record levels, and the ASEAN share of total global FDI has returned to between 7 and 9 per cent, the previous high that it reached before the collapse of the 1990s.

One of the ways in which ASEAN is competitive with India and China is in the labour market. China’s economic miracle has largely been driven by manufacturing, as the country increasingly became the workshop of the world. The working age population in China, however, is declining and wages there are increasingly. As this happens, foreign corporations have started to move their manufacturing operations to places like Vietnam and Cambodia that have abundant working age populations and relatively low wages.

According to a recent US Chamber of Commerce (AmCham) report, US investors want to invest in regions that have economic stability, strong potential for growth, reliable infrastructure and high quality labour. Countries like Thailand fit this bill perfectly and thus it is little surprise they are booming. US companies currently employ more than 200,000 local workers in Thailand and have provided more than $45 billion in investments.

The AmCham report said that US investors want predictability in the regulatory environment as well as transparency in policy making. And, as manufacturing and services go up the value chain, what will be needed is greater availability of skilled labor. For the moment, however, foreigners have decided that ASEAN is a strong bet for their FDI.

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