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The View | How to upgrade Asean’s infrastructure as more global businesses turn to the region
- From electricity to public transport and logistics, more inter-regional cooperation and investment is needed, as well as innovation
- Hong Kong can both serve as a conduit for mainland Chinese investment into Southeast Asia and provide sustainability finance expertise
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All eyes have been on Southeast Asia recently. From China and South Korea to Japan and the United States, international businesses increasingly see the region figuring in their expansion plans.
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Some want to build manufacturing bases in the Asean economies to take advantage of the lower labour costs compared to China. Private equity and venture capital companies are interested in the region’s growing start-ups, and other investment opportunities arising from young, digitally savvy populations.
Indonesia, Thailand and Vietnam are shaping up to be key parts of the electric vehicle supply chain and the region will start to figure more prominently in some parts of the semiconductor supply chain.
As a result, and because of higher economic growth forecasts in Asia than in much of the rest of the world, investment into the Association of Southeast Asian Nations has been resilient, bouncing back to the pre-pandemic level of US$174 billion in 2021. It helps that Southeast Asian countries generally still stand to benefit from their demographic dividend, even as East Asian populations age.
Southeast Asia’s infrastructure is one area of focus for foreign businesses. According to surveys, international investors see efficient logistics and infrastructure connectivity as among the most important measures to facilitate more investment in Asean – along with policy measures like streamlined investment procedures and visa support for expatriates.
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Recent power cuts caused by a heatwave in Vietnam, for example, have exposed the capacity limits of the electric grid, which badly requires an upgrade, and the need for electricity market reform. This has alarmed foreign businesses and disappointed expectations of Vietnam becoming a regional leader in renewable energy.
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