As an economic force, ASEAN has become the third growth engine within emerging Asia after China and India. It is playing an increasingly important role in regional trade and investment growth. This is particularly important at a time when the medium-term growth outlook for two of the G3 economies, the EU and Japan, is for protracted weakness due to high government debt levels and fiscal consolidation.

 

Over the next two decades, ASEAN will also continue to benefit from the rapid growth of the two Asian BRIC economies, China and India. Another key factor driving ASEAN’s ascendancy will be the sustained economic growth of Indonesia, which is forecast to become a US$4-trillion economy by 2030, larger than South Korea and Australia in terms of GDP size.

 

This will help make ASEAN an increasing important market for international businesses across a wide spectrum of industries. The ASEAN region will be one of the world’s fastest growing consumer markets during the next two decades. Overall, emerging Asian retail sales are forecast to grow at over 10% per year, compared with around 2% for the EU.

 

The rapidly growing size of consumer expenditure in ASEAN projected over the next 20 years will result in a major transformation of the structure of global multinational corporations, as United States and European multinationals dramatically transform their corporate strategies towards the Asia-Pacific region. ASEAN will account for a higher share of total annual investment into Asia-Pacific, as well as having a rising share of multinational corporation workforces and a greater voice in global top management for most multinationals.

 

The fast pace of growth in Asian consumer markets will also support the rise of ASEAN multinationals in many different industry segments, ranging from manufactures such as food processing and electronics to services such as banking, insurance, hotels, and healthcare.

 

ASEAN consumer markets will become increasingly important for global multinationals, as ASEAN middle-class incomes rise rapidly, driving demand for a wide spectrum of market segments ranging from fast-moving consumer goods to luxury goods such as watches and designer clothing as well as services such as financial products and health care.

 

The rapid growth of the ASEAN region will require large-scale investment inflows into physical infrastructure such as roads, rail networks, ports and power generation. Equally important will be the development of human capital, with investment in tertiary educational infrastructure and vocational training capacity being critical to economic development.