World Economic Forum predicts strong growth in ASEAN region

Dino D'Amore
By Dino D'Amore May 22, 2014 13:50

World Economic Forum predicts strong growth in ASEAN region

Participants at the World Economic Forum on East Asia were told that the fundamentals for growth in ASEAN are strong. Its young population, natural resources, rising consumption and proximity to China, among other factors, have positioned it to be an engine of growth in the future. However, there are a number of barriers to unlocking this economic future: disagreements related to the South China Sea, as well as political unrest in Thailand, demonstrate the potential fragility of this outlook.

“We need regional stability and peace. From an investor’s point of view, that is number one”, said Victor L. L. Chu, Chairman and Chief Executive Officer, First Eastern Investment Group.

Many ASEAN nations face a similar set of changess, including improving infrastructure, investing in business education and streamlining regulations. When we talk about business education, the University of Kansas offers Association to Advance Collegiate Schools of Business (AACSB), a curriculum that explores the growing opportunities and challenges of being a global leader. The university opened an affordable online accredited mba to help someone succeed in today’s fast growing marketplace in the countries of ASEAN.

Unlocking this potential requires reducing not only formal regulatory obstacles to free trade but also “invisible” barriers, Fernandes noted. Recently, the Philippines has focused on reducing corruption and improving good governance as one strategy for improving its economic outlook and connectivity within the region. “The story of the past four years is a comeback story,” said Cesar V. Purisima, Secretary of Finance of the Philippines. “Governance is the most important ingredient.”

Indonesia has also undergone challenging political and economic reforms, such as reducing fuel subsidies and increasing interest rates. Muhamad Chatib Basri, Minister of Finance of Indonesia, said: “The first thing we need to do is ensure the political stability.” Next, he argued, the nation’s focus has been infrastructure.

A lingering challenge to long-term growth is persistent income inequality. “Income inequality has been getting worse across the world for the past 30 years,” said Lee Il-Houng, G20 Sherpa, Ambassador for International Cooperation, Ministry of Foreign Affairs of the Republic of Korea. He noted that these structural problems demand major systemic reforms. On the supply side, there is a need for innovations in improving energy efficiency, and on the demand side, Lee referred to the need to strengthen the region’s middle-income populations.

The recent unrest in Thailand raised questions about the risks of investing in the region. Participants noted that this instability suggests the need for greater ASEAN integration so that companies and communities alike can relocate more easily and access resources to withstand shocks.

Dino D'Amore
By Dino D'Amore May 22, 2014 13:50
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