Conference Presentation, Fireside Chat, Panel
ASEAN: Energizing Asia's Growth
Milken InstituteAdam Schwarz, Dino Patti Djalal, Henry Nguyen, Serge Pun, Cesar Purisima, Ravi Thakran, Adam Shores
- ASEAN is projected to function as a distinct growth engine and potential top-five ranking region for profitability and top-10 for revenue by consolidating as a bloc, though intra-ASEAN trade remains low (currently 15–25% of total trade) with a potential $1.2 trillion opportunity if it reaches 40%.
- By 2020, the region is expected to have 400 million middle-class consumers representing 20% of Asia's total, with the broader Asian middle class comprising two-thirds of the global total and disposable income growth of 40%, creating demand for brands in garments and accessories.
- Vietnam is anticipated to be a significant beneficiary of "China plus one" strategies and the TPP, which is expected to be ratified within 12 months, requiring significant milestones in labor laws and SOE reform to realize economic gains.
- Indonesia aims for 7% growth by the end of President Jokowi's term but faces challenges regarding parliamentary backing, internal corruption involving the police and BKK, and a 14-year lag in joining the TPP while pursuing closer EU trading arrangements.
- Myanmar is expected to leapfrog sectors like telecoms from a "Stone Age" to 4G, offering investment opportunities in manufacturing and agriculture with labor costs at one-third of China's, though success depends on ministerial performance over the next few years.
- China is predicted to become the number one economy and remain the largest consumer of watches, yet Asian manufacturing currently captures only 6% of value despite producing 93% of watches, presenting a "huge transfer of value" opportunity if Asian firms master branding.
- Trade relations face headwinds from China's economic influence, where ASEAN risks being economically susceptible ("catch a cold"), alongside unresolved strategic tensions regarding South China Sea disputes and China's reclamation activities.
- Future growth is contingent on overcoming internal disagreements to utilize the "ASEAN way," developing a unified capital market to recycle capital internally, and involving the private sector to fill infrastructure funding gaps left by public institutions.
- Political transitions in the region, such as Myanmar's and Indonesia's, carry risks regarding corruption and coherence, while Singaporean and Philippine leaders emphasize the need for stability, clear agendas, and adherence to international law to secure investor confidence.
- Regional economic integration faces awareness gaps, with less than 1% of Indonesians aware of the ASEAN Economic Community, while the RCEP negotiations face recent slowing despite expectations of future acceleration.
- Global connectivity and technology revolutions are expected to drive competitiveness, but countries must avoid "shooting themselves in the foot" through policy disagreements to secure their position as major engines of growth over the next 30 to 40 years.
- Investment opportunities exist in establishing a "passport" for Public-Private Partnerships to accelerate project development, leveraging demographics as post-war baby boomers enter their productive phase to drive labor productivity.