According to a report surveying over 500 senior business executives of US companies, it was found that American companies are optimistic about investing in ASEAN. Their operations in the region will grow in importance, helping to improve their revenue and global standing.
The top four factors stressing the importance of the ASEAN markets include the rise of the middle class, limited growth opportunities in other regions, and infrastructure modernization.
The end of 2015 will be a milestone because the region will form an economic bloc called the ASEAN Economic Community (AEC). There are many elements of the community which make foreign businesses want to invest in ASEAN.
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
To truly realize these ambitions, the 10 member nations of ASEAN have developed an economic blueprint. It outlines 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 Southeast Asia’s economy even more.
What Makes Investing in ASEAN Unique?
So what makes ASEAN significant? Not just one nation, ASEAN countries together boast considerable population size and economic value.
Population-wise, the 10 countries are home to over 600 million people. If it were a country, ASEAN would be third most populous country in the world behind China and India. This also makes it 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
The responses varied between countries, however. There were many factors to consider in choosing the favorite countries to expand into.
Executives in the information technology and telecommunication industries are looking at countries which already have infrastructure ready such as Indonesia, Malaysia, Thailand, and Singapore.
On the contrary, those in the consumer goods, food products, oil and gas, transportation and logistics favor Myanmar for their expansion plans.
The “ASEAN Business Outlook” survey incorporated the responses of over 500 senior business executives of US companies which have operations in ASEAN. These businesses range all sizes and 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.
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