According to a recently published report surveying over 500 senior business executives of US companies of all sizes and many industries, it was found that American companies are extremely optimistic about growth prospects in the ASEAN region. Their operations in the region are expected to continue growing in importance, helping to improve their global standing as well as revenue.
The top four factors stressing the importance of the ASEAN markets, concluded from the surveyed polls, are the rise in the middle class, limited growth opportunities in other regions when compared to ASEAN, the regional integration with the upcoming AEC (ASEAN Economic Community), and infrastructure modernization.
The end of 2015 will be a milestone in the history of ASEAN as the region will set up its very own economic community called the ASEAN Economic Community. There are many key elements of AEC that will increase the attractiveness of the region to investors.
With the AEC, ASEAN countries aim to bring four main things to the region.
- A single market and a production hub
- A highly competitive economic region
- A region of fair economic development
- A region fully integrated into the global economy
In order to truly realize these ambitions, the 10 member nations of ASEAN have jointly developed an economic blueprint outlining a long list of targets to meet for economic integration.
In terms of economic integration, the region is looking to cut and ultimately eliminate any barriers to trade for goods, services, and investment. The goal of all these is to develop the region into a single market and production base.
Even though there have been hiccups along the way and some who doubt that the implementation of the AEC will really make a difference, the general sentiment towards it is clear. This will increase the vibrancy of the ASEAN economy even more.
What Makes ASEAN Special?
So what is it that makes the 10 countries so significant?
Not only being one of the few regions with potential yet to be tapped, ASEAN countries collectively boast a considerable size both in terms of the population and the value of the economy.
Population-wise, the 10 countries are home to over 600 million people, and if it were a country, it’d be third most populated country in the world just behind China and India. This also means that ASEAN is the third largest market in the world.
Together, the 10 member states form an economic powerhouse. If ASEAN were to be counted as a single country, it would be the world’s seventh largest economy with a combined GDP of over $2.4 trillion in 2013. According to a report on ASEAN from McKinsey & Company, ASEAN is poised to be the fourth largest economy by 2050.
The survey also inquired which countries would the companies be likely to expand into. On a regional level, the three countries that stood out as the most attractive are Indonesia, Vietnam, and Myanmar.
Different Paths to Economic Growth
Country-wise, however, the responses varied. There were many factors that had to be considered in choosing which country to expand into, the main one being the industry.
Executives in the information technology and telecommunication industries are looking at countries that already have infrastructure ready such as Indonesia, Malaysia, Singapore, and Thailand. On the contrary, those in the consumer goods, food products, oil and gas, transportations and logistics are favoring Myanmar for their expansion plans.
The conducted survey “ASEAN Business Outlook” incorporated the responses of over 500 senior business executives of US companies that have operations in ASEAN countries. These companies range from all sizes and many industries, with a special focus on manufacturing, services, and agriculture.
The survey was a collaboration between the American Chamber of Commerce in Singapore (AmCham Singapore) and the US Chamber of Commerce.