Comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, the Southeast Asian economy was the sixth largest in the world in 2016. By 2050 it will move up to rank as the fourth-largest.
Huge Economic Potential
As one of the largest economic zones in the world, SEA amassed a collective gross domestic product of about $2.6 trillion in 2016. Its potential for economic growth is supported by abundant natural resources, favorable geographic location and an increasingly well-educated and prosperous workforce.
After China and India, SEA has the world’s third largest workforce with about 630 million people, creating a potential market that is larger than the European Union or North America. Its middle class is also expected to double between 2012 and 2020 to reach 400 million people, making it one of the world’s most attractive markets for first-time consumers.
Free Flow of Trade
Through the Association of Southeast Asian Nations (ASEAN), a political and economic association comprising the 10 member states, big strides have been made particularly in recent years to collectively accelerate economic development and allow seamless trade between the states.
In 2015, the ASEAN Economic Community (AEC) was formed with the goal of developing a single market. By opening sectors to competition and breaking down trade barriers, AEC could potentially lift ASEAN’s economic output by 7 percent by 2025, and generate around 14 million new jobs to further drive economic growth.
Capital Infusions Drive Growth
SEA is a beneficiary of China’s massive One Belt, One Road Asian infrastructure development program. As China takes the lead in transforming the economies of countries along the ancient Silk Road from eastern China to Central Asia, the infusion of capital for the development of major projects will uplift and transform the SEA economies.
Already, SEA is a magnet for foreign investors who see the market potential. In 2013, Indonesia, Malaysia, the Philippines, Singapore and Thailand, known as the ASEAN-5 countries, received $128.4 billion in foreign investment, up 7 percent from the previous year.
ASEAN also launched a Master Plan for ASEAN Connectivity comprising 15 priority projects, including the ASEAN Highway Network, the Singapore-Kunming Rail Link, the ASEAN Broadband Corridor and the Mindanao-Bitung (Indonesia) Roll-on Roll-off Network.
In addition, the ASEAN Infrastructure Fund was established in 2011 to help member states finance their vast infrastructure needs, estimated at over $1 trillion from 2010 to 2020. That includes investments to build and strengthen cross-border transport and power grid links.
Indeed, significant infrastructure investments are estimated at US$110 billion per annum until 2025. The key areas of infrastructure investment include multimodal transport connectivity to improve logistics efficiency, utilities infrastructure and - crucially - infocomm and technology projects.
As Southeast Asia advances economically, technology is a critical enabler. To get a sense of the scale of technological progress, the region is today the fastest-growing Internet market in the world. Southeast Asia’s online population is expanding by 124,000 new users each day and will continue at this pace for the next five years.
That same appetite translates into a hunger for cutting-edge technologies.
Truly, SEA is in the midst of a golden moment in its economic development journey which presents shining opportunities for astute businesses.