The ASEAN post pandemic recovery plan focuses on attracting investment and creating a more resilient supply chain in the longer-term, says Asean Business Partners.
The comment is noted from the webinar The Future is ASEAN – a Pathway to Growth in Southeast Asia. Mr Ted Osius – President & CEO US-ASEAN, Business Council comments “At this point, the competition to attract investment is increasing among ASEAN countries. They will need to invest more in infrastructure, enhance interaction within ASEAN trade environment, and focus on innovation for sustainable growth. More importantly, they must control the Covid-19 epidemic and pay more attention to the next generation.”
ASEAN 5 including Indonesia, Vietnam, Philippines, Thailand and Malaysia has 6% market share on global exports and is about half of China. US holds the largest share of FDI stocks in ASEAN and the countries hold a common interest in investing in clean energy among other sectors.
ASEAN will represent 20% of the world’s middle class by 2030 and will have a large literate young population. Even as the pandemic crippled economies, ASEAN economies’ debt-GDP ratio is one of the lowest in the world, which shows that ASEAN will recover faster than the other emerging markets. ASEAN has competitive advantage over other markets in terms of cheap labour, attractive trade policies and is constantly improving investment policies.
Vietnam, too, would be more attractive if it improves the supply chain and recognizes the contribution of SMEs to the economy, according to Mr. Ted.
Rising competition among ASEAN
However, ASEAN countries will have to compete with each other to attract investment. Ms. Trinh Nguyen – Sr. Economist Emerging Asia- Natixis comments that the global oil, gas and supply chains crises still threaten economies. To date, Covid-19 vaccination rate is still low globally. It can be said that promising economies will be targeted for vaccine investment. South Korea recently supported vaccines for Vietnam, the cheap labor market.
Indonesia has emerged as a formidable competitor in the region. Its strengths thanks to its large population focused strongly on digital transformation in recent years, according to Mr. Batara Sianturi, CEO – Citibank Indonesia. Two prominent areas, potential fintech and electric vehicles have had significant export results.
Indonesia, as the largest nickel producer in the world, has the ability to dominate global supply of lithium and has promised to produce 600 million electric vehicles by 2030.
Meanwhile, Thailand’s biggest revenue generator – tourism is dominated by Chinese tourists is now expanding and promoting its services to other countries and looking beyond tourism. This diversification will help Thailand fallback on other sectors during economic shocks.
Being an attractive market, ASEAN still needs a solution for recent supply chain disruption. The reliance on China’s supply chain and market will push ASEAN to diversify supply and demand. Of course, US is not the only source, according to Ms. Trinh.
ASEAN is looking to modernize its investment rules and make the rules consistent with market needs and expectations, hoping to make the region predictable for cross-border investments. Việt Nam, cũng vậy, sẽ hấp dẫn hơn nếu cải thiện được khủng hoảng chuỗi cung ứng và công nhận sự đóng góp của SMEs trong nền kinh tế, theo Ted.
H.E. Tran Duc Binh Deputy Secretary General – ASEAN for Community & Corporate Affairs comments that ASEAN recovery plan will bring business opportunities among the region and define supply chain resilience in a post-COVID world. This plan will be successful if the region accelerates digital transformation to boost digital economy and fintech as well as developing renewable energy. Fintech will be a tool for regional transactions to increase financial inclusions and economic growth. Renewable energy, meanwhile, will be the next pillar to recover post pandemic.
ASEAN as a competitive investment destination is explained by the US’ investment in the region which is more than China, India, South Korea and Japan combined. The companies with interest in ASEAN must build relationships with key stakeholders, be clear about what the government priorities and various market trends. Potential of ASEAN will multiply significantly with the ASEAN integration coming together as a region to address its shortcomings.