As the
bloc becomes better integrated, ASEAN presents opportunities in diverse
sectors for small and large investors. Foreign investors will benefit from its
vast single market comprising of 600 million people and third-largest labour
market behind India and China. Investors can also benefit from ASEAN’s trade
agreements that are on par with international best practices as well as being
more responsive to regional changes and realities.
Among countries that Chinese companies
are looking to scale up their sales and operations in ASEAN, include Malaysia
which tops the list, according to a survey conducted for Standard Chartered.
Recent data from the Ministry of International Trade and Industry indicated
that China is Malaysia’s largest trading partner for the 12th consecutive year,
in 2020, with total trade valued at RM329.8 billion, accounting for 18.6 per
cent of Malaysia’s total trade.
What are the industries that show the
greatest potential for foreign investors in ASEAN?
Manufacturing
The sector annually contributes 20
percent to GDP and employs 15 percent of the total workforce in Indonesia. The
government hopes to turn Indonesia into a manufacturing hub in ASEAN, rivalling
those of Germany and South Korea by 2030. In Malaysia, the government provides
grants to encourage businesses to implement automation. Investors in the
electronics and electrical (E&E) sector are also eligible for a 10-year tax
exemption. But we need to improve approval speed and incentives as others can
always match.
Healthcare
In 2019, US magazine CEOWORLD stated
that Thailand had the sixth-best healthcare system in the world, beating Spain
(7th), France (8th), Belgium (9th), and Australia (10th). Moreover, the country
earned some US$589 million in 2019 from medical tourism. Thailand’s medical
devices industry is valued at over US$6 billion and 80 percent of local
production is exported.
Malaysia too, is competing with Thailand
and Singapore to become a medical hub in ASEAN, especially in the field of
medical tourism. The
country is developing a reputation as a provider of specialized treatments,
such as cardiology and fertility treatments. Malaysia exported over US$5 billion of medical devices in
2019, and over 50 percent of these were to Japan, the US, Germany, and China.
Thailand and Singapore may remain ahead unless we consciously develop
expertise, value-add and research capabilities to move in a quantum leap.
Digital-based economy
Indonesia’s digital-based economy is
predicted to be valued at US$130 billion by 2025, making it the largest in
Southeast Asia. The e-commerce sector will play a vital role in this industry,
with over 170 million people already engaged in some form of online shopping. The
digital economy is also set to impact the growth of new sub-sectors within it,
such as telemedicine, online education, and electronic payment systems.
Hydropower
Laos has a theoretical hydropower
potential of 26.5 GW, making the country one of the richest in ASEAN in terms
of hydropower resources. The industry accounts for 30 percent of all exports
and the government wants to make hydropower the largest source of state revenue
by 2025.
ASEAN countries have seen increasing
investments due to the fallout of the US-China trade war, as businesses move
all or part of their production lines into Southeast Asia. However, the
lockdowns make it more difficult for investors to assess situation on the
ground. And with tourism in the doldrums, another growth driver in Southeast
Asia is hamstrung. Some imagination and ability are required from government
agencies to innovate, adapt and respond to investor requirements even in a
pandemic.
Reference:
1.
Ayman
Falak Medina, Planning Your 2021 Investment Budgets: Opportunities in ASEAN,
Asean Briefing, 13 Nov 2020
2.
Standard
Chartered survey: Malaysia is top choice for Chinese companies’ expansion
opportunities in Asean, Malay Mail, 3 Jun 2021
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