The Association of Southeast Asian Nations (ASEAN) has many reasons to be proud because it celebrates its fiftieth anniversary: economic and social progress, manufacturing power and relative political stability.
The 10 ASEAN members boast a number of the world’s fastest-growing economies, with growth rates of greater than 6 percent within the Philippines and Vietnam. With a combined population of greater than 620 million and an economy value $2.6 trillion, the investment potential is big, and by 2020 the region may have the world’s fifth-largest economy, the World Economic Forum predicts.
But the goal of integrated economies stays a great distance off. Businesses still face constraints, despite a 2015 plan that maps out steps to eliminate trade barriers and create a single market to enable the free flow of products, services and labour.
Diverse political regimes, from democracy in Indonesia to a military junta in Thailand to communist rule in Laos and Vietnam, pose barriers to closer ties. Issues equivalent to competing claims over parts of the South China Sea have also fueled discord.
Founded in Bangkok in 1967, the five founding nations—Indonesia, Malaysia, the Philippines, Singapore and Thailand—formed ASEAN to spur economic growth and promote peace. Since then, they’ve transformed from largely poor, agrarian nations into manufacturing hubs for products starting from cars to cellphones.
The charts below show the ASEAN economy over five a long time:
Economic prospects
ASEAN’s gross domestic product rose to $2.6 trillion in 2016, roughly the scale of the UK economy, from just $37.6 billion in 1970. ASEAN is predicted to grow by 4.9 percent next yr, with Myanmar, Vietnam and the Philippines set to expand the fastest within the region, in accordance with BMI Research.
Trade
Many of ASEAN’s larger members, equivalent to Singapore, are heavily depending on exports, making them depending on the worldwide growth cycle. Southeast Asia has emerged as a robust manufacturing alternative to neighboring China, helped by lower labor costs, rising domestic demand, and infrastructure improvements.
Trade amongst ASEAN members stays low compared with regional groupings equivalent to the EU, in accordance with Capital Economics Ltd. Intraregional trade accounts for a few fifth of total trade, compared with greater than 60 percent for the EU. Non-tariff barriers remain high amongst members, particularly in Indonesia, Gareth Leather, senior Asia economist in London, said in a note.
Investment
Many countries within the region are having fun with the advantages of the demographic dividend. While China, Japan and Hong Kong have seen their labor forces shrink since 2015, Southeast Asia’s working-age population is about to grow by 2020, in accordance with estimates from Nomura Holdings Inc.
The region’s strong growth prospects are attracting more investment. Coca-Cola Co. is expanding in Vietnam and Myanmar, and Apple Inc. is constructing research centers in Indonesia.
Source : Bloomberg by Melissa Cook
