With China’s economy slowing, Japanese companies looking for an alternative to China due to political friction with Tokyo’s larger neighbour and a host of other factors, the Association of Southeast Asian Nations (Asean) has become flavour of the year for some portfolio investors and many companies.
If Asean were a country, the collective gross domestic product of its 10 members – from Myanmar on its western fringe to the Philippines at its easternmost point – would make it the world’s seventh largest economy, ahead of California. With combined gross domestic product of $2.4tn, its economies collectively were 25 per cent larger than that of India in 2013. Read more
The dream of an “Asean car” was first floated, in broad terms, by former prime minister of Malaysia, Mahathir Mohamad, when he spearheaded the creation of Proton in the 1980s. The idea was to form a national Malaysian car company that could be exported to Southeast Asia and beyond.
That didn’t quite work. Proton failed to gain traction much beyond its home market of Malaysia, although it did see some success as a low-priced, competently engineered vehicle in Britain for a time, thanks to the provision of engines by Mitsubishi of Japan.
Now, the idea has resurfaced. Najib Razak, current Malaysian prime minister, has announced that Malaysia and Indonesia plan jointly to develop an “Asean car”. Read more
Of all the colonial legacies left by Britain, France and the Netherlands in Asia, one of the least talked-about – yet arguably one of the most lasting and problematic – is the patchwork of legal systems that divides the region.
Doing business in the Association of Southeast Asian Nations (Asean) is gradually getting easier thanks to the elimination of tariff barriers, expansion of supply chains and gradual harmonisation of customs procedures.
Yet one of the big “soft” barriers to greater Asean integration, and one which makes life hard for multinationals and ambitious local companies alike, are the differing jurisdictions across the 10-member bloc. Read more
Chronic congestion at the Philippines’ biggest port is forcing Maersk Line, the world’s biggest container shipper, to treble the frequency of container services that it diverts to an alternative port 130km away to keep goods flowing in and out of the country.
The snarl up highlights the infrastructure bottlenecks that are threatening the Southeast Asian country’s ability to maintain the rapid growth of recent years.
While creaking infrastructure has long been a problem in the Philippines, it is being exposed as a serious constraint amid a flood of foreign investment in the country, which has helped turn it into a star performer in Asia. Read more
It is a truth almost universally recognised that internet penetration in the 10-member bloc known as Asean – the Association of Southeast Asian Nations – is low, even though the region is humming economically.
Or is it?
UBS has come out with some interesting research that will give the e-commerce crowd something to cheer. The bank finds that Asean has a 32 per cent “internet penetration rate”, or almost 200m users, out of a total population of 620m.
This contrasts with market data apparently widely accepted – and cited by UBS – saying that penetration could be as low as 62m users. Read more
Najib Razak, Malaysia’s prime minister, is so pleased that his country’s currency, the ringgit, is at its strongest level since 2012 that he felt the need to tweet it on Wednesday.
He added that – insha-Allah, or God willing – the growth rate of the majority Muslim nation would “remain anchored by strong domestic demand”.
If a report just out by Moody’s Investors Service is correct, Malaysia will need all the help it can get to ensure it remains on a healthy growth trajectory, with such reliance on domestic demand. Read more
Brewed coffee may not be an obvious market in southeast Asia, a region with a strong tea-drinking culture thanks to the region’s ethnic Chinese populations.
But Costa Coffee and its rivals think otherwise. The UK-based coffee chain – part of the London-listed Whitbread brewing and hotels group – is in the early stages of expanding into the region, home to 620m people and a growing middle class. Read more
If you are doing business in Asean – the Association of Southeast Asian Nations – be prepared for an electric shock.
Analysts at ANZ have looked at what’s happening with electricity prices across the region and are warning that they are set to rise, making it considerably more expensive to run factories. It will also add half a basis point on average to inflation, which is already inching up. Read more
Malaysia is not a market littered with private equity deals. Nor is the wider region of southeast Asia. Dealmakers have struggled with relatively high asset prices in Indonesia, and governance and other concerns in Malaysia and Vietnam.
But on Wednesday KKR, the big US-based private equity firm, closed a deal to invest Rm642m ($200m) in Weststar Aviation Services, a company that operates helicopters for the offshore oil and gas business. Read more
When a Legoland theme park opened in southern peninsular Malaysia last year, it provided parents in neighbouring Singapore with a new distraction for their kids, and a nice add-on trip for tourists in the city-state. The facility is less than an hour’s drive away across the causeway that links the two countries.
But it was also a sign of the Danish toymaker Lego’s ambitions in Asia – home to what it says are almost 60 per cent of its “target consumers”, the rising middle class in the region. (Legoland is actually operated by Merlin Entertainments, a UK company, but the benefit to the Lego brand is obvious.) Read more
Singapore’s Club Street is one of its liveliest spots for the bar-hopping crowd and is a good indicator of the economic “feel-good factor” in the Asian city state.
It is also an indicator of the health of the Asian hedge fund industry. Before the global financial crisis the neighbourhood, known for its preserved Chinese shophouses, was also home to a community of boutique hedge funds. Read more
Central banks, we are often told, missed the warning signs that led to the “Great Recession” in 2008: an excessive build-up of household and mortgage debt.
But Malaysia’s central bank, Bank Negara, is showing that you can get ahead of the curve and prevent trouble before it starts to build up to critical levels. That’s the hope, at least. Read more
For commodity traders involved in emerging markets – say, buying cotton in Africa and selling it to China – one of the biggest headaches since the financial crisis has been the tightening of trade finance terms by banks.
It has been harder to finance shipments of commodities as btanks, eager to reduce risk, have been reluctant to offer financing over long distances, or where there is a significant lag between the placement of an order by a customer and receipt of the goods.
Enter Maersk Line with a way round the problem. Read more
Southeast Asia’s credentials as the next great frontier for economic growth, spurred by young populations and cautious optimism over planned structural reforms is one this year’s big emerging market themes. Just look at the Philippines, which notched up 7.8 per cent growth in the first quarter, even beating China.
But for private equity, the region is proving a tough nut to crack. Last year, according to consultancy Bain & Co, was “underwhelming”. Deal value fell by 16 per cent to $4.9bn, the number of deals dropped to just 32, from 39 the year previously. Read more
Malaysia’s general election produced what many did not believe was probable, even if certainly possible: a respectable win for the ruling coalition, known as Barisan Nasional.
Yet some are now saying it will also produce something far less probable: a sudden end to its victor’s career. Really? Read more
As we come to the end of the first week of official campaigning in Malaysia’s cliffhanger general election – expected to the closest since the country’s independence in 1957 – a strange thing is happening.
Foreign investor confidence in the southeast Asian nation of 29m people was supposed to be getting wobbly. But it isn’t. Read more
Asia’s footprint in Africa’s commodity-rich economies has been growing, with Singapore-listed companies among the biggest investors.
Wilmar, the world’s largest refiner of palm oil, first moved into Africa in 2007 with a couple of palm oil refining joint ventures in Uganda and Ivory Coast. Africa is short of refined palm oil and Wilmar spotted an opportunity to fill that gap. Maersk, the Danish shipping line, says a significant proportion of the goods carried in ships from Singapore to Africa is refined palm oil.
Now Wilmar is expanding its African business to sugar. Read more
Waiting for Najib Razak, Malaysia’s prime minister, to call a much-anticipated general election is getting to be painful.
First it was to have been called at the beginning of the month. This would have meant polling in the last week of March, a convenient time since schools are out and classrooms are often used as polling stations in Malaysia. Read more
Election give-aways are the oldest political trick in the book.
But in Malaysia the prime minister, Najib Razak, is taking them to a new level with the distribution of cash handouts to low-income workers as he prepares to fight a tight election with the country’s opposition.
With the opposition making its own splurge pledges, the voters face some tempting offers. But investors may be less enthralled by the potential pressure on future budgets. Read more
Bose, the US maker of speakers and home entertainment systems, has chosen what to some might seem an unexpected location for its first manufacturing plant in Asia: Penang, on Malaysia’s western coast.
The plant will be the sixth for Bose worldwide, allowing it to supply markets in Asia more easily than from places such as Mexico, where it already has a plant. Read more