The world of business has seen a remarkable paradigm shift in the global scene in the past decade. Many highly industrialized Western nations experienced humbling economic downturns, while emerging markets in the East have begun their rise to becoming international powers.
While China and India have led the change, it is also worth checking one particular region that is looking to make a bigger impact today and in the future.
Southeast Asia Going Strong
Comprising Southeast Asia are 11 countries: Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, Cambodia, Brunei, Laos, Burma, and East Timor. Together, their population amounts to nearly 600 million people buoying a gross domestic product (GDP) that stands at $1.9 trillion.
Since 2002, the region has seen an average growth rate of more than five percent a year, resulting in average per-capita income that almost rivals that of China, the country with the biggest influence in the global economy today.
A report from the Organization for Economic Cooperation and Development also projects the region to continue that growth rate for the next five years.
City-state Singapore has also remained as a highly influential nation, firmly entrenched in the number one spot in the World Bank’s Ease of Doing Business report as it topped the list of 183 countries for the seventh consecutive year.
Potential for Progress
Southeast Asia has had a history of progress, most notably in the 1990s when it became the global hub for infrastructure finance. However, the effects of the Asian financial crisis of 1998 on the region’s infrastructure still linger. Energy and water distribution, as well as transportation, are major problems that plague most countries, and their governments have struggled to provide such services.
This is where private firms can step in to aid the public sector in delivering basic needs for the emerging markets within the region. Of the estimated $8 trillion allotted to developing infrastructure projects in Southeast Asia, businesses can invest up to $1 trillion through public-private partnerships.
Having weathered the storm of the 2008 global financial crisis relatively untouched, the region has shown potential for even bigger gains despite such problems. This is especially true with their governments’ ability to increase domestic spending, thanks to lower debt levels relative to Western nations.
Two Nations on the Rise
Aside from the general positive outlook for the region, there are two countries from within that group that could very well play a much bigger role in worldwide markets.
Thailand is the second largest economy in the area, with a GDP of $602 billion that only comes second to that of Indonesia. It posted a very impressive GDP growth of 6.4% in 2012 due to a massive increase of 18.9% by the fourth quarter of the year compared to the same period in 2011.
This significant growth can be attributed to the country recovering from the floods in 2011 that ground its activities to a halt. However, it is still worth praise for its ability to regain its growth within that timeframe.
Like most of the countries in Southeast Asia, it relies heavily on trade. It is only second to Malaysia in terms of exporting products to the US, moving mainly computer accessories and telecommunications equipment.
The real estate industry in Thailand is also seeing much growth, especially in Pattaya where property investments have been on the rise since 2008. For instance, units within The Base Pattaya, a two-tower high-rise project, were sold out within the month of February after only 10 days of sale period.
The Philippines is the other Southeast Asian country to look out for, as its reported GDP for 2012 hit a notable 6.6% growth, surpassing its government’s predictions of 5 to 6%. This marked increase is due to the 6.8% boost in the fourth quarter of the year, riding the trend of other Southeast Asian countries making good progress in the final months of 2012.
The tropical archipelago has also managed to outrank both China and India in Forbes’ Best Countries for Business List by landing at #87, with China and India getting #96 and #97, respectively. Trade freedom, corruption, market performance, and other such factors were taken into consideration in creating the list.
Improvements in monetary freedom, investor protection, and innovation helped keep the country on the same spot as last year’s list, despite the competition growing from 130 countries to 141.
With the stock market continuously hitting all-time high records, the bullish Philippine economy is also paving the way for an increase in the real estate sector, be it for residential or office properties. Analysts continue to provide a positive outlook regarding this market’s activity as 2013 wears on.
As has been the case in recent years, the business processing outsourcing (BPO) industry continues to be a key field in maintaining the country’s growth. Having bettered India as the biggest resource for BPO companies, the Philippines is expected to have a BPO industry worth $25 billion, or around 10% of the country’s GDP, by 2016.
Both countries are also projected to lead the region on its way to depending less on exports, with their improvements in domestic demand.
Investing in Southeast Asia
Businesses need to not just pay attention to the two emerging economic giants in China and India, as Southeast Asia begins its ascent to prominence in the global arena. Overlooking the small region’s exciting signs of productivity and prosperity might just cost them world.