Asia is the largest and fastest growing continent in the world, and the region’s emerging markets are set to change immensely over the next decade – however, some nations will see more foreign investment than others.

A survey by The Economist found that by 2020, businesses in Asia will be focusing their expansion efforts on Malaysia, China, and India. However, many more plan to open new factories and offices in Thailand, Myanmar and Vietnam by 2050.

71% of the poll’s respondents plan to build a new factory or office in China in the next five years, but only 23% do in ten years. Multinational companies expanding into Myanmar will almost double from 22% in 2020 to 42% in 2025 as the country continues its process of liberalization.

Meanwhile, firms with plans to expand into Thailand and Vietnam over the next five and ten years will increase from 31% to 36% and 30% to 38% respectively.

“Liberalizing intra-regional trade and investment is high on the agenda of some governments in Asia, but what is striking is how companies in the region are accelerating economic integration,” explained Kevin Plumberg, Senior Editor at The Economist.

Labor and overhead costs in China have increased rapidly which has driven companies, especially those involved in manufacturing, to relocate to countries in the ASEAN region such as Vietnam and Indonesia where prices are lower and talent is just as easy to come by.

The Economist’s survey also found that the services sector in Southeast Asia’s emerging markets is quickly becoming more prominent. Half of all respondents in the financial and professional services industries said that they plan on expanding into Myanmar by 2025.

Although less firms plan to invest in China over the next decade, the nation will continue to shape Asia’s regional economy, along with the rest of the world’s. In terms of nominal GDP, The IMF and World Bank both expect China to overtake the US as the world’s largest economy by around 2030.

Chinese business will also gain from increased connectivity with the rest of Asia. Developments such as the New Silk Road and a transcontinental high-speed rail network are perfect examples of this, and 41% of companies in China say that they have adopted a sales strategy for Asia as a whole.

The renminbi will also become more widely used in international trade. Almost one out of five respondents plan to use the currency to settle between 20% 50% of their payments over the next five years, second only to the US Dollar.

“Pursuit of opportunities in these markets mean that today’s Asian frontier markets, such as Myanmar and Vietnam, may be the high-growth emerging markets of tomorrow,” said Plumberg.


Share This