For more than two decades the growth story in the region has been focused on East Asian countries such as Japan, China and South Korea. In last five years however, South and Southeast Asian countries have become more prominent. With the rise of the south, the Asian region will see a more sustained period of growth and even spread of development. Many challenges remain as some of these countries rise from the ashes of war, while others work to shed old economic models to fulfill the aspirations of a new generation.
Three things will define the trajectory of these countries—rising literacy, the information age and political reform. From the Indian Ocean to the South China Sea, we highlight the following countries to give you a sense of how this region is going to shape the future of the world.
Sri Lanka: The Next Sunshine Economy of Asia
By Shiraz Latiff
With the end of the 30-year insurgency and its internal conflict, Sri Lanka is now poised to rear its head as a ‘sunshine’ economy in the Asian Region. With a forecasted GDP growth of more than 7% for 2013, we will be seeing some rapid progress, with heavy foreign direct investment flowing through in the following areas:
- tourism, leisure and entertainment;
- real estate and commercial property development;
- tertiary and vocational education; and
- IT-enabled services and business process outsourcing.
We have been seeing many major players in these areas making large-scale investments to create a foot print for them in the country. Shangri-La, Sheraton, Movenpic and Hyatt are some of the leading hotel and resort chains that have made direct investments. We will see many more such big names coming in to Sri Lanka next year as well.
With a relatively high literacy rate of 99% among Sri Lankans and with English as a second language, the soft skills that the country offers on top of its geographic and economic advantages are encouraging investors to seek refuge in a country like Sri Lanka when the world economy is showing a gloomy outlook.
Shiraz Latiff is a director at HummingBird International and a Consulus partner in Sri Lanka.
Vietnam: Time for Businesses to Upgrade
By Helena Pham Thị Thu Hằng
A lot of ink and paper have been spent discussing the financial fallout in Vietnam and the fact that Vietnam’s financial system would need an injection of at least $12 billion to clean up bad debts in the banking sector. However, Vietnam needs much more than just an injection of money at lower interest rates.
The root causes of bad debts can be categorised into two major levels. At the macro level, the current banking system should have been designed to provide transparency throughout the whole operations system, inter-banks and between banks and enterprises. If this were done, banks would have been able to reduce funding costs for enterprises’ growth. At the micro level, the current business models adopted by the majority of businesses in Vietnam were not meant to help companies depend less on low labour-cost contracting projects by MNCs.
A call to action
For Vietnamese enterprises to overcome the credit crisis and thrive beyond 2013, there are two fundamental changes Vietnam should take. First, companies need to transform their business models from being profit and revenue based to being value based. The current difficulties in business funding of Vietnamese SMEs have exposed short-sighted business strategy in which companies often chase for new revenue opportunities without affirming their value to customers, partners and financial institutions and expose themselves to a wide range of business variables. Second, companies need to take on bigger roles in the industry, transiting from a contractor role to a creator role. This is key to move up in the value chain, closer to MNCs. If this is not addressed, MNCs sooner or later will move their production bases out of Vietnam to other emerging countries to achieve cost advantages through economies of scale and low labour costs.
The credit crisis has reduced the global confidence in Vietnam’s economic stability tremendously. Vietnamese companies must act now and act together.
Helena Phạm Thị Thu Hằng is a Senior Manager at Consulus Vietnam. Helena has worked with business leaders in B2B and B2C to provide strategic advice design corporate cultures and to develop middle managers for companies to enable the business to scale upwards. With an MBA from Nanyang Technological University, Helena brings more than 10 years of experience in business development, marketing and change management with leading corporations in Asia.
Philippines: Brighter Days Ahead
By Mark Corpus
As the new year approaches, looking at how the Philippines’ economy has fared compared to its performance the previous year gives locals something to look forward to this coming 2013.
Government development programs
After a year of scrimping on government spendings to temper the culture of misuse from the previous administration, the Aquino administration has implemented its Public-Private Partnership Projects (PPP) infrastructure development programme this year, where they encouraged the private sector to help by co-investing in developing public infrastructure such as airports, roadways, communications and water systems.
The administration is quite strict on awarding projects. They make sure that these projects are aligned with national goals. Aquino safeguards public funds from misuse and also protects the interests of the people by making sure the government’s private partners are carefully picked according to the standards they envision their projects to have. This improved foreign investor confidence on the incumbent president and his administration.
Increase in consumer spending
Robust consumption from the middle class show that there is money to spend. A big contributor to this is the income from outside the country, primarily remittances from Overseas Foreign Workers (OFWs) and Business Process Outsourcing (BPO) local operations.
OFWs, in spite of economic hardships in the US and in Europe, still consistently send remittances to their families in the Philippines. The peso value became slightly stronger in the latter part of the year due to higher remittances during the Christmas season.
BPOs on the other hand, continue to invest on industry development because they foresee its growth until 2016. They continue to invest on land development for BPO campuses outside Metro Manila. This in turn, provides work for the middle class, giving them more propensities to spend.
This will be a strong industry by next year because local airlines have embraced the budget-fare business model, which will make travelling affordable even to the common Filipino. To add to that, big guns such as AirAsia have bought into the local airline market, showing confidence and promise in the industry.
The Open Skies Policy, which was authorised by the president this year, grants foreign carriers unlimited rights to fly in and out of the country without restrictions on frequency, capacity and type of aircraft.
An estimated 4.5 million foreign tourists arrived in the country this year. The “It’s More Fun in the Philippines” tourism campaign may have contributed to this boost in number.
The tourism boom helps develop the attraction sites and their surroundings. This brings income not just from tourists from abroad but from local tourists as well. This also entices businessmen to invest on local spots and develop them into tourist-friendly sites.
These are promising developments, but issues such as rising unemployment can slow down the momentum of the country’s economic growth. These issues still need to be addressed to give a level of certainty to the upward slope of the economy.
Mark Corpus is a Senior Executive (Business Development) at Consulus Philippines. He is a strategic thinker and a multimedia professional with a deep interest in the role of technology in new experiences.
Singapore: Inventing the Future
By Florence Oh
Despite the economic downturn in Europe and the United States, Singapore’s economy will continue to grow albeit at a lower pace. This is due to Singapore’s infrastructure being well-positioned to support Asia’s economies as the region continue to grow.
With a strong focus on research and development in biomedical sciences and IT—an important thrust in a knowledge-based economy like ours—efficient infrastructure and political stability, Singapore is positioning itself to be a leading research and development hub for the region.
The establishment of (CREATE) campus for research excellence and technological enterprise this year is the latest effort by the Singapore government to attract more R&D activities to Singapore. The first of its kind worldwide, the campus brings leading global research institutions together with our own institutions in Singapore to develop practical innovation and economic opportunities for us.
We called it a “collabotory”. It is a laboratory because we have created an environment that encourages cross fertilisation of ideas through partnerships—partnerships between research institutions, partnerships across scientific disciplines, partnership with industry and with Singapore institutions through multi-disciplinary projects that will yield benefits in many directions.
For example, the Technical University of Munich and NTU are working on an electric taxi as a model of electric vehicles or as a future means of urban transport. UC Berkeley, NUS and NTU are designing more energy-efficient and lower-carbon buildings in tropical countries, while Shanghai Jiao Tong University and NUS are working on improving energy and environmental sustainability in mega cities. These are research projects that will yield tangible benefits not only to Singapore but also to other societies as well.
Florence Oh is the Chairman at Consulus.
This editorial is part of The Columnist, a newsletter by Consulus that offers ideas on business, design and world affairs.