Emerging Markets in Asia Pacific Offer Brightest Prospects for Global FDI

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IHS Inc., the leading global source of critical information and insight, announced the findings from its study on Asia’s top ten foreign direct investment hotspots at the company’s Global Economic and Country Risk conference in Vienna.

“Over the next decade, the Asia Pacific region will grow at an average annual rate of 4.5 percent per year, boosted by rapid growth in consumer spending in China, India and Southeast Asia,” said Rajiv Biswas Asia Pacific chief economist for IHS. “A key source of strength for Asia Pacific is the rapidly growing size of the economic region, which now accounts for around one-third of world GDP, generating strong intra-regional trade and investment flows.”

Asia’s Top Ten FDI Hotspots:

• Northeast Asia: China;
• Southeast Asia: Indonesia, Vietnam, Philippines, Myanmar, Malaysia; Thailand;
• South Asia: India, Sri Lanka, Bangladesh.

Four ASEAN Countries to Enter Asia’s Trillionaire Club

Southeast Asia is expected to be one of the world’s fastest growing regions, with four ASEAN nations – Indonesia, Malaysia, the Philippines and Thailand – expected to join the ranks of Asia’s group of nations that have a GDP exceeding $1 trillion by 2030. “This will help to increase the geopolitical and economic importance of ASEAN as a political and economic grouping in international diplomacy and the global dialogue on trade, investment and international standards-setting,” Biswas said.

Meanwhile the ASEAN frontier markets of Vietnam, Myanmar, Cambodia and Laos are forecast to continue to grow rapidly. Vietnam will to grow at a pace of around 6.5 percent per year over the medium term, with rapid growth in manufacturing exports of electronics and garments driving industrial development. The new EU-Vietnam Free Trade Agreement and the planned TPP deal will significantly boost Vietnam’s market access to the EU and US for its manufacturing exports by reducing tariff barriers substantially.

Malaysia – Asia’s Next Advanced Economy

The Malaysian economy is forecast to achieve a per capita GDP of USD 20,000 by 2025, with total GDP exceeding $1 trillion by 2030. The structure of the Malaysian economy will continue to shift towards higher value-added manufacturing and services. Strategic growth industries in the services sector will include financial services, healthcare, education, commercial aviation, tourism and the IT-BPO industry, as Malaysia becomes an increasingly important services-exporting economy for Southeast Asia.

Philippines – Trillion-dollar Economy by 2030

The Philippines has also shown rapid GDP growth averaging around 6 percent per year over 2011-2015, with GDP growth of 5.8 percent per year forecast over 2016-2018. “The total size of the Philippines’s economy is projected to grow from $300 billion in 2016 to $700 billion by 2025, and a $1 trillion economy by 2030,” Biswas said. “This will make the Philippines one of the leading emerging markets in Asia”.

Indonesia – Trillion-dollar Economy by 2020

The Indonesian economy is the largest economy in Southeast Asia and is one of the world’s largest emerging markets. Indonesian GDP forecast to grow at 5 percent per year over 2016-2020, supported by strong growth in consumer demand and infrastructure investment. By 2020, Indonesia will have already become a nation with GDP size exceeding $1 trillion, and by 2030, Indonesian GDP is projected to exceed $3.7 trillion. “This will significantly increase Indonesia’s global geopolitical influence as a leading emerging market, shaping international policymaking in global forums such as the G-20 and United Nations,” Biswas said.

“FDI inflows into Indonesia have grown strongly over the last three years, with recent reforms announced by President Jokowi’s administration to liberalise foreign investment into service sectors such as logistics, health care and tourism,” Biswas said. “This is likely to boost FDI inflows even further.”

Indonesia has a large and fast-growing population (250 million), fast-growing household spending by middle class households and rapid growth projected in a wide range of industries. “The Indonesian domestic consumer market is very attractive for multinationals,” Biswas said. “Banking, insurance, health care, construction, retailing, commercial aviation and manufacturing are all industries aiding the Indonesian success story.”

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