No better time than now to invest in ASEAN
ASEAN is increasingly becoming the investment destination of choice as a strategy to enhance supply chain resilience.
Originally published in The Business Times.
With global trade growth expected to pick up in the coming years, ASEAN is increasingly becoming the investment destination of choice as a strategy to enhance supply chain resilience. Couple that with favourable demographics and the region’s growing focus on digital transformation, renewable energy and supply chain sustainability, ASEAN is a force to be reckoned with.
According to our Future of Trade report, ASEAN’s exports are forecast to achieve a compound annual growth rate of 6.7 per cent through 2030, outpacing the global average of 5 per cent. On foreign direct investments (FDI), ASEAN’s statistics show that inflows into the region from 2019 to 2023 rose almost 40 per cent to US$230 billion, bucking the global trend. Based on calculations by the UN Trade and Development (UNCTAD), world FDI inflows fell 23 per cent over the same period.
Indeed, on track to become one of the world’s largest trading blocs, the region’s global connectivity presents a near-unparalleled advantage from which to build future strength.
Businesses seeking to realise the full potential of their investments in ASEAN will need a two-pronged strategy that enables them to capitalise on its unique opportunities while leveraging the region’s super-connector status to build growth abroad.
I would like to highlight the three areas that excite me about ASEAN – the rise of the region’s digital ecosystem, the impending growth of its green economy and ASEAN as a super-connector hub.
Appeal of the data centres
With Boston Consulting Group’s projection that ASEAN’s digital economy could triple to US$1 trillion by 2030, there will be opportunities for more data centres with enhanced capabilities to support the flow of data and information. The rise of generative artificial intelligence (Gen-AI) will further boost this demand for data centres.
We’re already seeing tech giants’ increased presence, such as Nvidia’s recent partnership with Malaysia to nurture data centre’s AI capabilities and Microsoft’s plan to building a data centre in Thailand.
This increased investment in data centres will come with a growing push for a reduction in carbon footprint from these physical facilities. To capture this demand, Singapore recently launched a roadmap, aiming to add at least 300 megawatts of capacity in the near term through partnering industry players to improve energy efficiency and accelerate the use of green energy.
Beyond data centres, the region’s buildings sector also offers many green opportunities for corporates. According to the Southeast Asia’s Green Economy report by Standard Chartered in collaboration with Bain & Co., GenZero and Temasek, the industry currently accounts for around one-quarter of greenhouse gas emissions in ASEAN. But by retrofitting existing buildings and adhering to guidelines and regulations for new buildings to be more energy efficient, there’s potential for the sector to reduce its carbon footprint.
The green economy opportunity
Such a development will complement the region’s climate action. As the world’s fourth largest energy consumer, ASEAN has seen its demand rise on average by around 3 per cent annually over the past two decades and it’s set to continue through 2030, according to the International Energy Agency.
Governments across ASEAN have set out long-term plans for a more secure and sustainable future, with many having already announced net-zero emissions and carbon neutrality targets, which will help propel energy efficiency improvements and the transition to a clean energy economy.
At Standard Chartered, we advocate facilitating a just transition that delivers sustainable and inclusive growth. With a long-standing presence in parts of the world where sustainable finance can have a significant impact, we are committed to facilitating the movement of capital to where it is needed most.
This underscores our confidence in the region and highlight the many opportunities businesses can leverage to their advantage. But the promise of ASEAN goes beyond what it offers within the region. Importantly, this super-connector bloc can serve as a launchpad from which businesses expand to the rest of the world.
Super-connector ASEAN
As the only international bank present in all 10 ASEAN markets with an extensive global footprint, we have helped many of our clients grow across the world. For example, some of our clients have expanded their technology footprint to build data centres in Korea, while others have taken their energy transition journey to Western economies.
Further afield, Africa is also an upcoming landing spot for expansion, as the second-largest continent is backed by a growing population and rising demand in areas such as the food commodity space.
All in all, investing in ASEAN offers more than just growth opportunities within. The region also serves as an invaluable base from which to expand overseas.
To succeed, companies will need to foster partnerships with local industry players, government agencies and trusted financial advisers who can help them devise strategies to leverage on unique opportunities in ASEAN and beyond.
The time to act is now!
Source: The Business Times © Singapore Press Holdings Limited. Permission required for reproduction.
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