As China’s economy cools, countries belonging to the Association of Southeast Asian Nations (ASEAN) are expected to rise in economic prominence, reported the IMF. After all, with a collective population of more than 686 million people (8.58% of the total world population) and a combined GDP of $3.3 trillion, ASEAN is one of the most vibrant regions globally, according to data and Xing Huang, a senior lecturer at the University of Portsmouth, who studies applied microeconomics.
In an interview, Huang said, “Despite the significant rise in international trading costs due to the ongoing economic challenges, ASEAN remains well-positioned for sustained growth. She added, “ASEAN has taken regulatory initiatives to promote innovation and intellectual property rights protection, thereby improving the investment climate and fostering economic advancement in the region, such as the ASEAN Intellectual Property Rights Action Plan 2016-2025.” This policy encourages innovation, boosts competitiveness, and creates a conducive business environment.
Consequently, by 2050, ASEAN is poised to become one of the world’s top four economic powers, according to research published by Harvard Business Review. Its member nations—Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—are expected to contribute significantly towards this endeavor.
Thus, the economic and political environment of the region is increasingly attractive to investors: these countries offer a wide range of labor-intensive and skill-based sectors, nascent but promising consumer markets, and an advantageous geographical position for the efficient transportation of goods.
This is why governments have taken a proactive approach towards promoting intra-regional trade and investment in the region. For example, the ASEAN Free Trade Area (AFTA), established in 1992, is one of the most ambitious free trade agreements ever signed. AFTA eliminates tariffs and other non-tariff barriers to trade within the member countries, making it easier for firms to operate across borders and increase their market access. According to Lebene Soga, an associate professor of management practice and entrepreneurship at Henley Business School, non-tariff barriers to trade encourage entrepreneurial activity, which ultimately boosts economic progress. “By reducing barriers to market entry, businesses are able to more easily engage in cross-border partnerships towards their entrepreneurial success,” said Soga in an interview.
Subsequently, in recent years, global companies have attempted to strengthen their regional presence. For example, Microsoft has opened two new regional offices in Singapore and Indonesia, while Citigroup has launched a digital-only bank in Thailand. At the same time, India’s Reliance Industries has acquired a controlling stake in Indonesia’s largest retail chain.
The region is also home to an increasing number of high-growth companies, such as Grab, and the GoTo Group, helping drive innovation across the region. These firms are not only transforming the way people do business but also creating new opportunities and jobs.
Yet, despite the progress made, ASEAN countries still need to overcome several challenges, such as developing regional human capital and infrastructure, improving governance, and creating a more conducive regulatory framework for businesses. “If these challenges can be addressed, ASEAN countries have the potential to become an even bigger global trade powerhouse in the years to come,” said Azeem Abu Bakar, managing director of Free Malaysia Today (FMT), in an interview.
The London School of Economics alumnus added that although FMT has benefited from the Malaysian government’s recent open attitude towards the media, which has allowed for more freedom of expression and the creation of a more level playing field for media companies, resulting in FMT capturing 45% of the share of voice in the Malaysian media industry, according to Meltwater analytics, there is still work to be done.
“Independent and balanced reporting is necessary to ensure democracy thrives,” concluded Sandra John, executive editor of FMT, adding, “This is particularly important given how the media needs to provide a space for debates on important topics critical to the success of any region.” Huang agreed, concluding that “Media should be used to promote discovery and progress for a nation’s people, rather than the interests of certain individuals or groups.”
This is pertinent because, according to research, an open and accessible media landscape helps to foster a healthy business environment, one of the three core elements for sustained economic growth and development: the other two being sound macroeconomic policies and good governance. This is why Singapore recently implemented the Corporate Governance Framework, which strengthens corporate governance and accountability standards by providing companies with guidance on ethical business practices. Meanwhile, several companies have taken steps to nurture young leaders. Grab, for example, has established a leadership training program for its employees. The firm also offers scholarships for university students in the region to help hone their talent.
These efforts are helping effectuate a more conducive environment for businesses and propel the region forward into a new era of growth. This will likely be a long-term effort, but, if successful, highly impactful.
In conclusion, ASEAN countries have made remarkable progress in the past few decades and have an auspicious future ahead of them. That said, there are still challenges that need to be addressed in order for the region to reach its full potential. Companies, governments, and individuals must work together to create a supportive environment for businesses, and to ensure that the region continues to be competitive on a global scale.
Source: forbes
