• Pornprapun Sriyotha

Growth Momentum in 
SouthEast Asia 
Markets

Updated: Jun 13, 2019

When it comes to economic growth in Asia, Southeast Asia (SEA) is one of the most potential markets. Its economic bloc could become the fourth-largest economy in the world by 2030 after the United States, China, and the European Union with four countries in the region – Indonesia, Malaysia, the Philippines, and Thailand – are expected to have a GDP exceeding $1 trillion by 2030. With such a healthy growth outlook, our team collected data for selected markets in the region as an executive summary to understand the growth potential on each market.


INDONESIA - Rebuild the country

The Indonesian economy continues to show strong growth, with predictions that it could become the world’s fourth-largest by 2050.


Key economic growth driver for Indonesia includes

  1. Indonesia put infrastructure constructions as its flagship agenda. According to ADB, Indonesia needs approximately $1.6 trillion in investment if it is to meet its investment needs by 2030. Currently, Indonesia is drafting ambitious plans for more than $400 billion in building projects.

  2. Strong domestic demand is a main driver of growth. About 50 million new consumer will be classified as middle-income earners by 2019 due to rising wages and attractive demographics.

  3. Indonesia continues to reform the country’s business environment. The country was upgraded to the investment grade by all the major agencies.

THAILAND - Deteriorating competitiveness

Thailand’s competitiveness deteriorating due to trade tension, political uncertainty and low labour productivity make it increasingly hard to sustain its growth going forward.

Key economic growth driver for Thailand includes

  1. Eastern Economic Corridor has initiated to facilitate new investment via incentives since early 2018 to develop growth industries including: (1) Robotics (2) The intelligence electronics (3) Next-generation automobile (4) High wealth & medical tourism (5) Biofuel and biochemical (6) Food processing (7) Comprehensive healthcare (8) Advance agri and biotech (9) Aviation and logistics (10) Digital industry Infrastructure investment

  2. Mega projects investment timeline (2016-2024; Bt2.3tn) including dual-track railways, mass-transit and motorway routes.

SINGAPORE - Asia's Tech Capital

Singapore aims to push its next stage of growth by riding the digital wave and upgrading the country’s transport infrastructure.

Key economic growth driver for Singapore includes

  1. Singapore is aiming to loose regulations make its investment climate even more attractive and transparent for international firms looking to set up trading hubs

  2. Singapore will allocate a $222 million to spur research in digital innovation as the government transforms the economy through technology with the aim to roll out artificial-intelligence and cloud-based solutions to every business sector by 2020

  3. Singapore will continue to upgrade infrastructure into Smart buildings and smart infrastructure

Malaysia: Re-engineering growth

The Malaysia Government have to speed up the introduction of more growth-friendly policies to drive economic growth

Key economic growth driver for Malaysia includes

  1. Malaysia holds strong FDI and trade prospects owing to its mega infrastructure plans such as the high-speed rail, East Coast Rail Link, and China’s One Belt One Road Initiative. However, The moderation in manufacturing sector’s production and possibly a drop within the construction sector due to the cancellation or postponement of mega projects will keep GDP growth subdued.

  2. Multi-regional economic links such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership are further expected to boost foreign investments in the country

Philippine: Build, build, build

Philippine is in transitioning to a new economic infrastructure

Key economic growth driver for Philippine includes

  1. Build, Build, Build program The Philippine government is set to embark on an ambitious $180 billion infrastructure spending bonanza, set to transform the Philippines’ economy which include 75 flagship projects, (six airports, nine railways, three bus rapid transits, 32 roads and bridges, and four seaports) that will help bring down the costs of production.

  2. Promote FDI. The government is also looking to immediate approval of the 11th Regular Foreign Investment Negative List, or FINL to reduce foreign investment restrictions

Vietnam: The rising star

Vietnam's economic growth momentum remains robust due to its strong economic fundamentals and supporting policies to ensure long-term prospects for the economy.

Key economic growth driver for Vietnam includes

  1. Global demand for smartphone - spare part and computer electronics are the key driver of Vietnam's stellar economic performance.

  2. Vietnam has established relations with many economic strategic partners, the country has recently concluded a FTA with the EU in early 2018, which eliminates nearly all tariffs.

  3. Foreign-operated factories make goods mainly for export from South Korea, Singapore, Japan and Taiwan will continue to drive economic growth. Vietnam is one of the top recipients of FDI in the region.

Cambodia: Robust economy

Cambodia, a top garment-making hub, has been one of the fastest-growing economy.

Key economic growth driver for Cambodia includes

  1. China-proposed Belt and Road Initiative as a key development strategy for the country's trade and investment expansion.

  2. Cambodia needs to diversify and upgrade its economy. Beyond traditional industries like garment manufacturing and footwear, the government has put in place policies and economic reforms to attract more foreign direct investment (FDI) in the manufacturing sector, especially in its Special Economic Zones.

  3. Robust construction and tourism activity. The government has achieved a tremendous result by acquiring more than 2 million inbound Chinese visitors and investment from China in real estate sectors especially in property development, hotels and casinos.

Lao P.D.R.: Battery of Asia

Lao PDR’s development has been significantly shaped by the power sector. Electricity has become one of the top export earnings.

Key economic growth driver for Lao P.D.R. includes

  1. Chinese Investment: China is the largest foreign investor, the second largest trade partner, and the largest aid provider of Laos, and Laos is the third largest destination of China's investment in ASEAN countries. Key investment projects include China-Laos Railway, Nam Ou River Hydropower Station, Saysettha Development Zone and Mohan-Boten Economic Zone.

  2. Battery of Asia: According to Laos’s national strategy to become a Battery of Asia, the government plans to build more than 90 hydropower plants by 2020 and export most of the generated electricity.

Myanmar: Structural reform

Myanmar’s economy is amid structural reform.

Key economic growth driver for Myanmar includes

  1. Myanmar will target broad-based economic development, fueled primarily by the private sector with the state playing a facilitating and support role that makes efficient and sustainable use of the country’s resources.

  2. Myanmar has continued to reform since April 2016, announcing a number of strategic planning initiatives such as the Myanmar Sustainable Development Plan 2018–2030; National Education Strategic Plan 2016–2021; Myanmar National Health Plan 2017–2021; and the Myanmar National Social Protection Strategic Plan – NSPSP (2014).

You can also download the PDF document via the Slideshare below.

#ASEAN #Growth #MarketOverview #ExecutiveSummary

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