Trade flows in re­gion seen hit­ting US$100b

New Straits Times - - Business -

KUALA LUMPUR: In­vest­ment flows be­tween the 10 Asean na­tions are likely to breach US$100 bil­lion (RM429 bil­lion) this year as the growth pace now matches the re­gional trade flows, said In­ter­na­tional Trade and In­dus­try Min­is­ter Datuk Seri Mustapa Mo­hamed.

In­ward di­rect in­vest­ment into Asean to­talled US$96.7 bil­lion last year as re­gional play­ers took ad­van­tage of the lower cost of do­ing busi­ness, as well as the more trans­par­ent in­vest­ment rules and reg­u­la­tions.

With a growth pace of about 23 per cent per an­num, in­vest­ment flows are al­most as strong as the 26 per cent in­tra-Asean trade.

Ex­perts said the fast growth pace of di­rect in­vest­ment at 24.76 per cent could see re­gional in­vestors over­tak­ing the Euro­pean Union.

Do­mes­tic de­mand would be the main driver for the re­gion’s eco­nomic growth this year, said Mustapa at the one-day In­traAsean In­vest­ment Fo­rum, here, yes­ter­day.

It was or­gan­ised in con­junc­tion with the Asean 50th an­niver­sary cel­e­bra­tion.

With a record US$2.55 tril­lion gross do­mes­tic prod­uct last year, Asean is the third-largest econ­omy in Asia and the sixth largest in the world.

Last year, Asean com­pa­nies in­vested US$23.9 bil­lion in the re­gion, an in­crease of 12.2 per cent from the pre­vi­ous amount.

The lift in num­bers in re­cent times, said Mustapa, was also due to the lib­er­al­i­sa­tion of eq­uity par­tic­i­pa­tion, which prompted many cor­po­ra­tions to shift their op­er­a­tions.

More than 1,000 Malaysian com­pa­nies have marked their pres­ence in the re­gion and many are now house­hold names.

They in­clude AirAsia, Al­loyMtd with the mini Pu­tra­jaya pro­jects in the Philip­pines, UEM Group with the long­est toll road in In­done­sia, Ga­muda trans­form­ing Viet­nam with its mixed devel­op­ment project, Sime Darby’s push of the palm oil agenda in In­done­sia, Ax­i­ata be­ing a ma­jor telecom­mu­ni­ca­tion player in Asean, the bank­ing sec­tor’s strong pres­ence in the re­gion and ZICOlaw hav­ing its firms in all the cap­i­tals.

Lo­cal brands like Old Town White Cof­fee, Se­cret Recipe and Roti­boy are also do­ing well abroad.

“While big com­pa­nies con­tinue to score in Asean, fo­cus must also be given to small and medium en­ter­prises to ben­e­fit from closer eco­nomic in­te­gra­tion,” he said.

SMEs con­trib­uted less than five per cent of the to­tal in­vest­ment in the re­gion.

He said multi­na­tional cor­po­ra­tions in the re­gion had adopted pro­duc­tion strate­gies that in­volved hor­i­zon­tal and ver­ti­cal multi-plant op­er­a­tions in two or more Asean coun­tries for strate­gic and eco­nomic rea­sons. Rupa Damodaran

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