State by State: ASEAN and Virginia Trade
ASEAN may not figure highly on the radar for businesses in Virginia, but exports to the South-East Asian bloc represent a one and a half billion dollar trade value, amounting to 5 percent of all Virginian exports. That amount is not to be sniffed at and suggests potential for development. Of the Virginian products exported, the top items are as follows:
- Computers and electronic products
- Food & related produce
- Paper Products
Virginia has 9,921 jobs supported by exports to ASEAN, meaning exporting to Asia contributes significantly to the state economy. Of the main ASEAN nations, we can examine the larger players and their relationship with Virginia as follows:
Virginia exported US$308 million of goods to Indonesia in 2013. The ASEAN market has doubled in size in the past decade and is now Virginia’s largest growing export destination. Indonesia is the 10th largest market for Virginian agricultural exports.
Virginia received US$613 million in imports from Indonesia in 2014, up 20.7 percent from 2013 and ranking 12th overall. This total trade balance suggests that the growing consumer class in Indonesia is starting to buy higher value products from Virginia and is therefore a market worth exploring by domestic Virginian companies.
Virginia exported US$119 million in goods to Malaysia in 2014, up 12 percent year on year. Exports have been steadily increasing over the past decade, with agricultural products featuring heavily. However, this is offset by a large volume of Malaysian imports, totaling some USD1.1 billion in 2014 and increasing by 7 percent per annum.
The TPP agreement, when signed, will impact on Virginia kraft paper and paperboard exports to Malaysia, lowering import tariffs from the current 20 percent. This represents a new market Virginia can exploit when the TPP deal goes ahead.
Virginia exported US$107.7 million of products to the Philippines in 2014, up 17.8 percent from 2013. This has shown significant growth of 60 percent over the past decade. Balance of trade with the Philippines is in Virginia’s favor, with the state importing US$57.8 million from the Philippines in 2014, up 9.4 percent from 2013. This again suggests a growing and healthy trade balance between the country and the state with further development potential.
Virginia exported US$528 million in goods to Singapore in 2014, ranking 7th overall and representing a sharp increase to the US$310 million it exported in 2005. Singapore is a transshipment hub for Asia, with many of these goods destined for other Asian markets. These include:
- Computer and electronic products
- Electrical equipment, appliances and components
- Machinery, except electrical
Virginia imported US$348 million in product from Singapore in 2014, making it another ASEAN nation with a trade balance in Virginia’s favor. Given the benefits of the US-Singapore Free Trade Agreement and the potential in markets such as Indonesia, Malaysia and Thailand, this makes Singapore a good service hub for Virginian companies looking to develop exports to the Asian region as a whole. Our complimentary magazine about investing in Singapore can be obtained here.
Virginia exported US$208 million in goods to Thailand in 2014, up 90.7 percent from 2013. Exports have risen 200 percent since 2005. Thailand was 19th in Virginian agricultural and forestry goods exports with US$46 million absorbed, up 39 percent from 2013. Virginia imported US$211 million in products from Thailand in 2014, meaning the state and the Thai nation enjoy parity in trade relations.
There is plenty of scope for development of Virginia exports to the ASEAN region. Overall, the state enjoys a healthy trade balance with the region, with only Malaysia selling significantly more than it imports from Virginia. All other ASEAN nations import greater amounts from Virginia than they sell, or are at parity, and in all cases this trade flow has been growing at increasing rates.
ASEAN nations probably deserve rather more attention than they are currently getting as bona fide export markets for Virginia. It is not insignificant to note that the average per capita income of a working professional in Richmond is US$57,286, almost the same as Singapore, the de facto financial and trade capital of ASEAN. Virginian businesses are urged to look at Singapore as an export hub for the rest of Asia in order to develop new overseas opportunities and markets.
Further Support from Dezan Shira & Associates
Dezan Shira & Associates can service Virginia-based companies that are looking to further develop their operation in ASEAN. The firm can help companies establish a direct office in the country and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at email@example.com.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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