Asia Pacific emerging markets to be global FDI hotspots

16 Apr '16

4 min read

Southeast Asia is expected to be one of the world's fastest growing regions, with four ASEAN nations – Indonesia, Malaysia, the Philippines and Thailand – expected to join the ranks of Asia's group of nations that have a GDP exceeding $1 trillion by 2030. “This will help to increase the geopolitical and economic importance of ASEAN as a political and economic grouping in international diplomacy and the global dialogue on trade, investment and international standards-setting,” Biswas said.

The ASEAN frontier markets of Vietnam, Myanmar, Cambodia and Laos are forecast to continue to grow rapidly. Vietnam will to grow at a pace of around 6.5 per cent per year over the medium term, with rapid growth in manufacturing exports of electronics and garments driving industrial development. The new EU-Vietnam Free Trade Agreement and the planned TPP deal will significantly boost Vietnam's market access to the EU and US for its manufacturing exports by reducing tariff barriers substantially.

Amongst the other South Asian economies, Sri Lanka and Bangladesh are expected to show rapid growth over the next decade. The new Sri Lankan government has embarked on sweeping economic reforms, with its first budget containing considerable economic liberalization measures. The Sri Lankan economy is projected to grow at an average annual pace of 5.6 per cent per year over 2016-2020. Key growth industries are expected to include logistics, tourism, agricultural products, IT-BPO industries and construction.

Despite political turbulence, Bangladesh has made considerable economic progress over the past decade, with average annual GDP growth exceeding 6.5 per cent per year since 2006. Bangladesh has emerged as an attractive location for FDI into low-cost textiles, clothing and footwear manufacturing, due to its relatively low wage costs compared to coastal China. (SH)

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