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ASEAN – The next PRD?<br />
Special Report: Shop Talk – China, ASEAN and robotics<br />
(particularly Singapore, Malaysia and Thailand) perform well in international rankings,<br />
such as the World Bank’s Ease of Doing Business and the World Economic Forum’s<br />
Global Competitiveness Index (Figures 12 and 31). The rest have potential to improve.<br />
ASEAN overtook China in terms of inward FDI in 2013. While this is mostly<br />
concentrated in Singapore, other ASEAN economies will likely command a bigger<br />
share of FDI in the coming years (Figure 13). Most FDI goes into the manufacturing<br />
sector, reflecting the region’s positive attributes for investment in manufacturing<br />
facilities (Figure 18).<br />
Figure 16: ASEAN has cost advantages<br />
Monthly manufacturing wages, USD<br />
1,600<br />
1,400<br />
1,200<br />
1,000<br />
800<br />
600<br />
400<br />
200<br />
0<br />
SG CN MY TH PH ID VN LA KH MM<br />
Source: JETRO, Standard Chartered Research<br />
Figure 17: ASEAN benefits from labour-force growth<br />
Average annual labour contributions to GDP growth vs. trend<br />
growth, ppt<br />
2001-05 2006-10 2011-15P 2016-20P 2021-25P 2026-30P<br />
8<br />
7<br />
6<br />
Trend growth<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
-1<br />
-2<br />
ID PH MY TH SG CN<br />
Source: IMF, Penn World Tables, Standard Chartered Research<br />
Figure 18: Manufacturing sector is the main beneficiary of FDI in ASEAN<br />
% of FDI<br />
Agriculture Mining Manufacturing Utilities Construction Services<br />
Vietnam Neg.* Neg. 67 12 Neg. 16<br />
Indonesia 8 14 39 10 Neg. 26<br />
Malaysia Neg. 30 40 Neg. Neg. 38<br />
Thailand Neg. Neg. 55 Neg. Neg. 40<br />
Philippines Neg. Neg. 42 Neg. 6 49<br />
Myanmar Neg. Neg 17 70 6 6<br />
Singapore Neg. Neg. 15 Neg. 5 80<br />
*Neg. = negligible (less than 5%); Source: Official websites, Standard Chartered Research<br />
Figure 19: FDI to Vietnam from Northeast Asia has<br />
increased in recent years (USD mn)<br />
Figure 20: Vietnam’s large working-age population is a<br />
key advantage (working-age population, mn)<br />
10,000<br />
9,000<br />
8,000<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
0<br />
South Korea Singapore Taiwan Japan Hong Kong<br />
Top 5 as<br />
share of total<br />
(RHS)<br />
2006 2008 2010 2012 2014 2016<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
80<br />
Vietnam<br />
70<br />
60<br />
50<br />
Myanmar<br />
40<br />
30<br />
Thailand<br />
20<br />
Cambodia<br />
10<br />
Lao PDR<br />
0<br />
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050<br />
Source: CEIC, Standard Chartered Research<br />
Source: UNHP, Standard Chartered Research<br />
19 July 2016 34
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