According to the Asian Development Bank (ADB) and the International Monetary Fund (IMF), the Southeast Asian (SEA) economy is forecasted to grow by 4.7% in 2023, much faster than the global average of 2.7%.
Some reports even suggest that ASEAN is on track to become the world’s largest market by 2030, with a predicted influx of investment and new businesses. This year, especially manufacturing, tourism, and the digital economy will be ASEAN’s most promising sectors.
Investment in the ASEAN region’s manufacturing industry will remain high. For example, Malaysia, Vietnam, and Indonesia have registered the most significant increases in car manufacturing growth according to the data from the ASEAN Automotive Federation (AAF). Other potential markets include the Philippines, which ranks third in overall car sales for the region.
SEA countries have also benefited from public-private partnerships (PPPs), the Regional Comprehensive Economic Partnership (RCEP), special economic zone (SEZ), government tax breaks and incentives, and so on.
Tourism in Southeast Asia is also expected to present several investment opportunities. This will likely boost businesses in closely related industries, such as retail, hospitality, and food and beverage (F&B). The success of the tourism industry will largely depend on the return of tourists from the rest of Asia and the rest of the world and the proactivity of governments to offer travel incentives similar to ongoing visa programs in Malaysia and Indonesia.
Southeast Asia’s most potential industry could potentially be its digital economy, especially considering that it concerns highly promising areas like financial technology (fintech) and tech start-ups. Moreover, given that the combined gross merchandise value (GMV) of the ASEAN-6 is expected to reach 330 billion USD by 2025, the region and its citizens are expected to spend a significant amount on digital platforms.
While several factors will influence the progress of the ASEAN digital economy, new market entrants should first consider investing in MSMEs as holistic development across all economic sectors, regardless of the industry, will be a foundational component for future successes. It is important to highlight that MSMEs are an integral part of countries in Southeast Asia as they account for approximately 97% of all businesses across the region per 2020 data.
Southeast Asia also faces challenges like infrastructure development, workforce upskilling, and environmental sustainability. To overcome these, a collaboration between the public and commercial sectors will be crucial, especially when developing initiatives that increase regional power in all spheres of society.
Still, factors like ASEAN’s combined GDP of 3.2 trillion USD, the relatively young regional population entering the labor market, and its good geopolitical position keep benefiting the region.
Read the full analysis HERE.
Add Comment