Industries

Hungry for More: A Taste of ASEAN’s Foodservice Industry

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By Harry Handley

ASEAN foodserviceSoutheast Asia is one of the four key target regions for international expansion in the consumer foodservice industry for 2017, according to Euromonitor research. ASEAN boasts a well-developed food culture, as well as a consumer preference for dining-out and a young, curious, and experimental population.

To support the development of the region’s foodservice industry, the ASEAN secretariat introduced a new food safety policy in 2016. The policy sets out 10 principles aimed at harmonizing food safety regulations and advancing regional integration in the industry. ASEAN leaders hope that a more closely integrated and transparently regulated market will lead to further interest from international companies.

As ASEAN’s foodservice industry gradually becomes more integrated, opportunities for regional expansion are rife. However, catering to local tastes in the foodservice industry is crucial, and though they share commonalities, each Southeast Asian country also boasts their own unique consumer preferences. Consequently, both identifying the preferences of the target market and choosing the appropriate entry model is instrumental to achieving success in the region.

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An Introduction to e-Commerce in Malaysia

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By Harry Handley

In recent years, the Malaysian government has worked tirelessly to achieve their goal of becoming a high-income nation by 2020. Through the government’s Economic Transformation Programme (ETP), a number of key service industries have been heavily promoted and subsidized in order to make this goal become a reality – one of which is e-commerce.

Despite almost 70 percent internet penetration in 2015, only five percent of Malaysian businesses had an online presence. Many leading experts believe that the Malaysian e-commerce market is at an inflection point and may be about to experience a serious boom period. Along with rising incomes, growing smartphone and internet penetration is expected to increase the proportion of online retail spend in Malaysia from 0.5 percent of total retail spending (2014) to five percent by 2020.  This makes it an interesting time to assess the state of the market, in terms of government initiatives, consumer trends, incumbent players, and opportunities for foreign firms.

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Threading the Needle: the Rise of Myanmar as a Garment Manufacturing Alternative

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By Mike Vinkenborg

myanmar garmentWith the government of Myanmar recently passing its new Investment Law, taking effect in April 2017, the country is showing its continued commitment to attracting foreign investment. After reopening its economy in 2012 following several political reforms beginning the year before, Myanmar has been receiving significant increases in foreign direct investment, reaching a high of US$9.5 billion in the 2015/2016 fiscal year ending in March. To put this in perspective, the total amount of FDI added up to only US$329.6 million in 2009/2010, the year before the military ceded power. While oil, gas, and energy remain the sectors with the highest FDI inflows, investments into Myanmar’s manufacturing industry are rapidly gaining traction, having risen from just US$33.2 million to over US$1 billion in the same period, and hitting a high of US$1.8 billion in 2014.

As China strives to move up the value chain and focus more on high-end manufacturing, the country’s wages have risen to the point where many garment manufacturers are looking to invest elsewhere. Cambodia and Vietnam have already established themselves as alternatives, and now Myanmar is bringing a new labor force to the competition. Clothing exports have already gone up from US$337 million in 2010 to US$1.46 billion in 2015. And now that the economic sanctions by the EU and US have been lifted, the Myanmar Garment Manufacturers Association (MGMA) has set a target for exports to increase to US$12 billion by 2020. Doing so would create an estimated 1.25 million new jobs, a sharp increase from the approximately 250,000 people currently working in the garment industry.

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Industry Spotlight: Identifying Opportunities in ASEAN Real Estate

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ASEAN Real EstateBy: Alexander Chipman Koty

With the establishment of the ASEAN Economic Community at the end of 2015, many ASEAN members have witnessed increasing harmonization of economic policies. The removal of trade barriers and increased openness throughout ASEAN is partly a result of the implementation of pre-arranged regional integration and standardization measures, but is also caused by growing competition between ASEAN members themselves to attract foreign investment. Real estate is one area which has been the target of liberalization efforts in many ASEAN member states in recent years, and has subsequently witnessed considerable growth.

Between 2005 and 2014, investments reached US$28.19 billion, largely coming from investors outside the region. Investment in the sector is poised to continue growing at impressive rates in the coming years as restrictions on foreign investors are eased and the region’s emergent middle class exercises increased spending power. Emerging markets including Vietnam, Indonesia, and Cambodia have been conducting reforms to make foreign involvement in their real estate markets more accessible, presenting a wide range of opportunities. However, considerable obstacles remain when investing in ASEAN’s real estate market. Despite an improving investment landscape, many countries continue to have highly restricted land ownership laws, including short land tenures and restrictions on the ability to re-lease and renew land. As much of the region grapples with high urbanization rates and inadequate infrastructure, governments must balance the desire to attract foreign capital with providing their citizens with affordable housing.

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Cascade Asia Upbeat on Renewed Opportunities in Indonesian Manufacturing

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By: Cascade Asia Advisors

As businesses look away from China and towards other countries to fulfill their manufacturing needs, Indonesia is an increasingly attractive prospect. With a massive workforce, a growing middle class, and newly established investment incentives, Indonesian leaders are making clear their commitment to promoting Indonesia as a hub of manufacturing in Southeast Asia. 

Although Indonesia shows promising signs of growth in the manufacturing industry, regulations governing the sector are still cumbersome and are further complicated by governmental red tape. Ambiguous legislation, combined with stark regional differences in infrastructure, make it imperative for prospective investors to understand the Indonesian manufacturing climate. In this respect, Manufacturing in Indonesia: new options, opportunities and challenges, published by Cascade Asia Advisors, provides a clear overview of the current investment environment and considers the investment incentives, the fastest growing sectors, and the most cost effective locations in the country.

The following is a brief outline of Cascade Asia’s insightful article, which highlights the momentum that will move Indonesia closer to its goal of rebuilding its manufacturing industry.

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ASEAN’s Sharing Economy: Understanding Opportunities and Navigating Regulations

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Investing in ASEAN's Sharing EconomyBy Cameron Gilchrist

As internet penetration rates continue to rise in Southeast Asia, ASEAN grows more interconnected by the day. Home to over 663 million inhabitants, the region is projected by many to be among the world’s most promising markets for a variety of internet based services. Chief among these are services involved in what has been coined the “sharing economy” – a loose collection of peer-to-peer services known to substantially lower costs for key necessities such as transport and accommodation.

In a 2014 study conducted by Nielsen, Indonesia and the Philippines ranked as two of the top five populations worldwide primed to participate in the sharing economy. While Indonesia ranked second in the study, with 87 percent of respondents reporting a willingness to utilize products within a sharing economy, the Philippines only trailed by two percentage points, earning fourth place.

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Setting Sail in the Sea of Java: An Introduction to Indonesian Aquaculture

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Indonesian FishingBy: Aysha Nesbitt

As the world’s largest archipelago, Indonesia is among the most important producers of aquaculture globally. In 2001, Indonesia ranked fourth in aquaculture output and has since increased its fishery exports to US $4 billion in 2015. Though Indonesia’s aquaculture industry has begun to make strides, it is still far from realizing its full potential.

In an effort to harness its comparative advantages, the Indonesian government has made monetary commitments to the sustainability of the industry and is working to relax regulations surrounding foreign investment. Upon their election in 2014, both President Joko Widodo and Susi Pudjiastuti, the Minister of Maritime and Fisheries, have been working to establish strategies to promote and expand Indonesia’s fisheries.

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IMF Estimates Philippine Growth to Top 6% in 2016

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ManilaBy: George Llewellyn-Jones

Spurred on by domestic demand, the Philippine economy is performing the best out of the ASEAN-5, according to the IMF’s latest Regional Economic Outlook (REO). Gross Domestic Product is forecast for growth rates of 6.0 percent for 2016 and 6.2 percent for 2017. Underpinning these gains, higher public consumption and investment are pointed to as the drivers of demand as the country progresses from its rate of 5.8 percent in 2015.

Private demand is shown to be increasing as a result of low unemployment, low oil prices, and higher worker remittances. Private investment is also expected to perform well as infrastructure has developed and public-private partnership projects are on the rise. The Philippines didn’t suffer too badly from the spillover effects coming from China’s slowdown, however, the country needs to do more to catch up on regional export levels.

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The State of ASEAN Aviation in 2016

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ASEAN AirlinesBy: Alexander Chipman Koty

As ASEAN pursues greater regional integration and the development of a single economic bloc, advancements in the region’s aviation industry are essential to boost economic connectivity and tourism. In addition to promoting free movement of labor, liberalization will open the industry to unfettered competition between airlines and allow for regional expansion of national carriers. Half the world’s population live within five hours of ASEAN, making South East Asia a natural transportation hub not just for visiting the region’s sunny beaches, but also for accessing the bloc’s growing economic opportunities as well as those in neighboring India and China.

Disparities in member states’ levels of development, however, introduce obstacles of protectionist policies and poor infrastructure which stall the liberalization of the industry. While the long term prospects for ASEAN’s aviation industry are bright, there are significant barriers for investors to overcome to increase their presence in the region.

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Singapore: An Emerging Hub for Medical Devices

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By Emerging Strategy

It comes with little surprise that Singapore consistently ranks as one of the top countries to do business in; the country’s infrastructure and well educated workforce attracts multinationals, SMEs and start-ups alike. What may shock some investors, however, is Singapore’s involvement in the medical devices industry – still a relatively young sector overall – and its push to become one of the top medical technology hubs in Asia.

Singapore’s medical devices industry is currently aiming to hit SG $5 billion in manufacturing output. The government is targeting up to 1 million foreign patients a year, which will contribute SG $2.6 billion (US $1.55 billion), or about one percent, to Singapore’s GDP. Already there are 30 global medical technology companies, including the industry’s leading manufacturers, who carry out their operations and R&D in Singapore.

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