The Association of Southeast Asian Nations (ASEAN) is an example of how smaller global economies can band together to exert a more powerful influence within the international community and have their collective voice heard. ASEAN is made up of 10 members: Brunei Darussalam, Cambodia, Indonesia, Lao PDR (Laos), Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Originally founded in 1967 to foster regional cooperation and promote peace, ASEAN today has an ambitious agenda that includes accelerating economic growth, trade and regional interests in the decades to come. I’ve invited my colleague Dennis Lim to share some of his thoughts on the progress therein, and the investment potential we see in the region.
Dennis Lim
Senior Vice President
Senior Managing Director
Templeton Emerging Markets Group
We think the potential for ASEAN is tremendous for a number of reasons. The region has a population of more than 620 million, but unlike the economic powerhouses of Japan and China, which have a larger collective population, ASEAN nations have a more youthful demographic. For example, China’s median age is 37 and Japan’s is 46, while the median age for the ASEAN countries of Cambodia and the Philippines is 24.1 An aging population tends to exert a greater drag on resources, with fewer working-age people to support growth. If you put this more youthful population together with factors such as the rising per-capita GDP generally seen in the region, and its progress toward reforms and collective cooperation, to us the attraction to these markets seems obvious for multinational companies offering consumer goods and services, and for investors like us. Additionally, wages are currently lower in ASEAN countries than in Southern China, so manufacturing companies have been relocating to Vietnam, Indonesia and elsewhere in the region. When you combine these favorable demographics with the region’s growth potential, you can see why they’re worth paying attention to. We believe there is good potential for Asian economic growth to feed into corporate profitability, leading to expanded investment opportunities.
Myanmar’s Transition
While our investments have been currently focused on Thailand, Indonesia, Malaysia and Singapore, we expect Vietnam to rapidly come onto the radar screen as the breadth and depth of the market continue to improve. The same is true of the Philippines. Over a longer time frame, we think Myanmar, Cambodia and Laos could be exciting as well.
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