Asia is the largest and fastest growing continent in the world. Needless to say, the region’s emerging economies will change immensely over the next decade. But some nations will see more foreign investment than others.
A survey by The Economist found that businesses in Asia will focus their expansion efforts on Malaysia, China, and India by 2020. Many others plan to open new factories and offices in Thailand, Myanmar and Vietnam by 2050.
Meanwhile, China will continue seeing less interest. 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 liberalization.
Thailand, Vietnam are Favorite Emerging Economies
More firms especially plan on investing in Thailand and Vietnam over the next five to ten years. Investment in these countries will increase from 31% to 36% and 30% to 38% respectively.
“Liberalizing intra-regional trade and investment is high on the agenda of some countries in Asia, but what is striking is how companies in the region accelerate economic integration,” explained Kevin Plumberg, Senior Editor at The Economist.
Labor and overhead costs in China have surged. This has driven companies to relocate elsewhere in Asia. Vietnam and Indonesia are popular since prices are lower and talent is just as common.
The Economist’s survey also found service sectors in Southeast Asia’s emerging economies becoming more prominent. Half of all respondents in professional services said that they plan on expanding into Myanmar by 2025.
China is Still Important
Less firms plan to invest in China over the next decade, but the nation will still continue to shape Asia’s regional economy.
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 benefit from increased connectivity with the rest of Asia too. Developments such as the New Silk Road are perfect examples of this. 41% of companies in China say they have adopted a sales strategy for Asia as a whole.
Furthermore, the renminbi will become more widely used in global trade. Almost one out of five respondents plan to use it to settle 20% to 50% of payments over the next five years.
“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.
With all of that said, not all emerging markets are growing quickly. Be careful about where you invest.
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