ASEAN ‘Untapped’ by Intl Investment

MANILA ~ Despite a potential market of some 600 million people, the ASEAN region is still largely untapped by the international business community, business leaders say.

In the four years from 2001 to 2005, some US$50 billion flowed into the Association of Southeast Asian Nations (ASEAN) region compared to $274 billion to China, according to the Manila-based Asian Development Bank (ADB).

Total net foreign direct investment into the region last year amounted to $23.9 billion, of which 60 percent went to Singapore.

“Compare this to the $60 billion invested in China last year and you get some idea what the region is up against,” says economist and president of the Philippine Business Leaders Forum Michael Clancy.

“Business has failed to focus on the opportunities that a common ASEAN market will create,” Clancy said. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Clancy’s group, which is a country associate of the Economist Intelligence Unit, will manage this year’s ASEAN Business and Investment Summit (ASEAN-BIS) in the central city of Cebu next month.

Established four years ago by the ASEAN leaders, it now forms an integral part of the annual summit.

Donald Dee, head of the Philippine Chamber of Commerce and Industry (PCCI) and national host of the ASEAN-BIS said: “ASEAN is on the way to becoming a common market of almost 600 million consumers.”

He said structural changes put in place in recent years coupled with the quickening pace of ASEAN economic and political integration is making the region an attractive investment destination with its young and growing population.

This year, for the first time, the ASEAN business leaders’ summit will open its doors to the wider global business community.

“Our intention is to be inclusive rather than exclusive,” Dee said.

“Multinationals and other foreign businesses operating within ASEAN are legitimate stakeholders in developments within the region and we want them to contribute to the dialogue process,” Dee added.

According to Clancy, the achievements and opportunities of Southeast Asia, dominated by ASEAN, tend to be neglected in the boardrooms of London, New York and Dubai.

Despite China’s overcapacity, it is still attractive to investors, but China has failed to deliver on its early promises and the expected consumer market continues to elude major corporations, he says.

The rapid rise of local firms has meant that for many global companies seeking a slice of the Chinese market an investment in China has meant falling prices, falling margins and in some cases total loss of competitiveness.

“Many companies are finding that there is a hidden cost of doing business in China,” Clancy said.

“One survey recently suggested that many companies were worried about their inability to conduct due diligence on local partners or suppliers.

“Cost and quality of living for expatriate staff remains a problem and finding and retaining talent is a growing problem.

“Problems of intellectual property protection abound and supply chain management is also a major concern for many companies,” Clancy said.

“Increasingly, global companies are coming to the realization that while an Asian presence is essential to their global growth strategy, total reliance on either China or India to provide that presence is undesirable.

Filed under:

Comments are closed.