Trade flows in region seen hitting US$100b

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