Transcript Session 7. The Analysis of BRICS Business in Southeast Asia

This collection was collated by Yuriy Zaytsev as teaching material on the FDI from the BRICS course at the Institute of Development Studies.
Session 7. The Analysis of BRICS
Business in Southeast Asia
FDI from the BRICS
Questions of the session
• The factors, which determine international business modes
of engagement for development in Southeast Asia;
• To what extent do the BRICS (as a group) differ in their
approach to investment compared with investors from
industrial countries in Southeast Asia?
• The volumes of FDI among investors, the regions, sectors
and markets of engagement and concentration in countries
of Southeast Asia;
• The determinants of BRICS business modes of engagement
and market accession, and mechanisms to overcome
capital market imperfections in countries of Southeast Asia;
• BRICS business influence on the socioeconomic
development of the poorest nations in Southeast Asia.
Investments flows
Capital inflows and volatility
New investments in Viet Nam, 2011– Top 20 source countries
By investing country and region
Source: ADB estimates using data from CEIC Data Company (accessed 22 August 2013)
FDI inflows in selected ASEAN economies, USD million
Source: Bank Indonesia and World Bank.
Source: Foreign Investment Agency – Ministry of Planning and Investment.
Effects of FDI on investment in individual developing
countries, 1970–20066
Crowding in
Neutral effect
Republic of Korea
China
Pakistan
Indonesia
Thailand
Malaysia
Philippines
Sri Lanka
FDI regimes in Asia have remained the least liberal in the developing world
• Several Asian countries still practice screening of investment applications and
grant differential incentives to different firms;
• Some types of investment have remained prohibited for most of the period
under review;
Investment climate (1)
Governance indicators in developing Asia relative to the OECD
World Governance Indicators, 2011
Source: ADB estimates using data from Hulme, D., A. Savoia, and K. Sen. 2013.
Governance as a Global Development Goal? Towards Measures for the Post
2015 Development Agenda. Effective States and Inclusive Development
Working Paper. University of Manchester.
•
Note: Indicators range from –2.5 to 2.5
with higher numbers denoting better
governance quality. Regional score is the
simple average of the country scores.
Source: ADB estimates using data from World Bank, World Governance Indicators online
database (accessed 6 September 2013).
Investment Climate (2)
Development indicators in Asia and the Pacific
Inflation, South Asia
Sources: United Nations Development
Programm Human Development Indicators
online database; World Bank. World
Development Indicators online database;
World Economic Forum. Global
Competitiveness Index data platform (all
accessed 20 September 2013).
Source: Asian Development Outlook database
The main stakeholders
• Current and emerging opportunities
• New Zealand
• AANZFTA provides for the progressive reduction or, for most
products, elimination of tariffs facing Australian goods exports to
ASEAN countries over a transition period, and the elimination of all
Australian tariffs on imports from AANZFTA parties.
• AANZFTA affects all goods and services imports, exports and
investments between Australia, New Zealand and the ten ASEAN
countries. It is recommended that Victorian companies familiarise
themselves with how their products and services are impacted by
the FTA and what benefits and responsibilities are required from
them when doing business in the region.
Prospects for BRICS business
Specific sector opportunities:
• Financial Services:
–
funds management, Islamic finance and banking services:
•
•
Automotive industry:
–
components, research and development (technical collaborations), and engineering and design services.
•
•
dairy nutriceuticals, meat and meat processing (including halal), and tradable services:
•
vocational education and training, ELICOS, and higher education:
•
Key markets: Vietnam, Malaysia, Indonesia, Thailand.
Information and Communications Technology:
–
e-Learning, wireless and broadband technology, mobile software and applications, and telecommunications
•
•
Key markets: Indonesia, Malaysia, Philippines, Vietnam.
International Education:
–
•
Key markets: Malaysia, Indonesia, Thailand, Singapore.
Food and Beverage:
–
•
Key markets: Malaysia, Singapore, and Indonesia.
Key markets: Malaysia and Singapore.
Infrastructure and Services:
–
infrastructure, building and construction, urbanisation, corporate capacity building (business services),
transport and logistics services, water technology, and oil and gas industry (technology supply and services):
•
Key markets: Malaysia, Singapore, Indonesia and Vietnam.
Problems
• Infrastructure investment will continue to play
a major role and have a major impact on
ongoing economic growth across ASEAN:
– During 2006–2015 the ASEAN countries would
require infrastructure investments amounting to
USD500 billion with an average investment of
USD50 billion+ per year. (Asian Development Bank
Institute).