ASEAN: Geared for green growth as part of the Asian Century
Updated: Apr 27, 2021
With a population of approximately 640 million, ASEAN (the Association of Southeast Asian Nations) region is the third most populated area in the world. The combination of emerging and developed markets with strong and consistent economic growth rates of five percent on average, makes Southeast Asia one of the most commercially interesting regions in the world. As a whole, the region is characterized by stable GDP growth and high consumer confidence.
Danish expertise is in high demand across all of Southeast Asia. As exemplified by more than 500 Danish subsidiaries in the region and a positive outlook for Danish export with an estimated yearly growth in the export of goods of approx. 6 per cent and export of services of approx. 2 per cent towards 2020.
Asia’s Century starts in 2020
According to Financial Times, Asia’s Century starts in 2020…
In 2020 the combined Asian economies will surpass the rest of the world.
In 2020 Asia will house half of the global middleclass.
In 2020 more than 2/3 of the world’s megacities will lie in Asia.
… and within Asia, ASEAN seems geared for growth:
Most analysts forecast that the ASEAN region will become the 4th largest economy in 2030 after USA, EU and China.
It is estimated that there will be 400 million middleclass consumers in Southeast Asia by 2020 (Nielsen, ASEAN 2015: Seeing around the corner of a new Asian landscape). And more than half of Southeast Asia’s population are below 30 years old.
Further economic integration is advancing in ASEAN, and progress has already been made on negotiating regional trade deals, including the The Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
New EU Free Trade Agreements will lower barriers to regional trade. The EU Free Trade Agreement with Singapore (EUSFTA) was concluded in 2018 and the EU Free Trade Agreement with Vietnam got the final green light in first part of 2020. Negotiations on agreements with Indonesia, Myanmar and the Philippines have been launched. In a benign scenario an EU-ASEAN Free Trade Agreement may be envisioned in the long term.
Indonesia is expected to become the world’s 4th largest economy in 2050.
Vietnam and The Philippines are expected to experience the highest gains in rankings over the world’s richest countries.
A diverse region despite similarities
Despite macro-level similarities, Southeast Asia remains diverse and companies looking to adopt a one-size-fits-all strategy to win will likely not gain full market traction. Each country has its own unique characteristics that set them apart from each other – as exemplified below by the Nielsen analysis below.
Average Household Income Distribution – Nielsen 2019 ”What’s next in Southeast Asia – seizing uptapped potential in Asia’s next growth frontier"
Local Market Drivers – Nielsen 2019 ”What’s next in Southeast Asia – seizing untapped potential in Asia’s next growth frontier"
Environmental challenges increases the demand for green sustainable solutions
After several decades of strong economic growth in the region, fuelled by a more or less singular political focus on economic growth, the region is now facing substantial environmental challenges. Making economic growth sustainable is a systemic challenge, in all countries, at all levels. The challenge is further exacerbated by urbanisation: around half of the population of the region is now living in urban areas, up from around 20 percent just 50 years ago, and urban infrastructure is struggling to cope with these substantially larger populations.
Herein a growing need for energy and environmental solutions, especially within water, air pollution and waste. Rapidly growing energy demands further underscores the need for better energy solutions concerning supply and efficiency, as well as more renewable energy sources.
While most governments and countries in ASEAN have targets that support renewable energy structures, challenges in the environmental areas remains unsolved and business opportunities are growing. Denmark has a strong reputation for energy, environment and water solutions in ASEAN, and providing companies keep a close ear to the ground, the partnership and business opportunities seems increasingly accessible.
Contact the author for more information about business opportunities in Singapore:
Mark Edward Perry
Trade Advisor at Royal Danish Embassy Singapore
Phone: +65 9088 5567