7 Highlights Investors Should Know About ASEAN’s Economic Outlook

ASEAN, the Association of Southeast Asian Nations, was established in 1967. The group’s aims include the acceleration of economic growth, social progress, and cultural development for states within Southeast Asia.

Today, ASEAN contains 10 member countries. This would be Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

There is much to learn about ASEAN and its economic prospects. Market researcher Frost and Sullivan had recently released a report that shared its outlook for ASEAN’s economy. Here are seven highlights I had gathered:

  1. The report focuses on only four ASEAN members, namely, Singapore, Malaysia, Indonesia and Thailand. Collectively, the quartet account for over three quarters of the US$2.45 trillion ASEAN economy.
  2. The four countries had 357 million people in 2014. While their population is expected to increase to 381 million in 2020, the rate of growth is slower than in the past. From 2005 to 2014, the quartet’s population had expanded at 1.3% annually; the projected annual growth rate from 2015 to 2020 is ‘just’ 1.11%. Singapore is expected to increase its population from 5.5 million in 2015 to 5.7 million in 2020.
  3. The age distribution is also expected to shift in the next five years. In 2015, Singapore’s old-age dependency ratio (the ratio of people aged 65 years and above to 100 members of work force) is 16. Frost and Sullivan expects this ratio to increase to 36 by 2030. Similar trends are seen in Indonesia (from 8 to 12), Malaysia (from 8 to 15), and Thailand (from 15 to 29). Singapore also has a high expatriate population – it is around 28% of the total population in 2015.
  4. Despite Singapore’s size, it has one of the highest tourist arrivals among the quartet. Frost and Sullivan estimates that there were 26 million tourist arrivals to Singapore in 2015, compared to 15 million to Malaysia and 10 million to Indonesia.
  5. This is not from the report, but some companies in Singapore’s stock market are exposed to tourism spending in our Garden City. Straco Corporation Ltd (SGX: S85), which operates the Singapore Flyer, would be one example. Elsewhere, Starhill Global Real Estate Investment Trust (SGX: P40U), which owns the shopping malls Ngee Ann City and Wisma Atria on Orchard road, might be another. Coming back to the report, growth in tourist arrivals to Singapore have slowed since 2013 though (there were 26 million and 27 million arrivals to Singapore in 2013 and 2014, respectively).
  6. Singapore has the highest GDP per capita among the quartet. The Garden City weighed in with US$53,000 in GDP per capita in 2015. This figure is expected to rise to US$69,000 by 2020 (an annual growth rate of 5.4%). Meanwhile, Indonesia is the laggard among the quartet. Its GDP per capita was just US$3,000 in 2015 and it is projected to increase at a rate of only 5% per year to U$3,800 in 2020. Malaysia is the one with the fastest growth rate; Frost and Sullivan estimates that the country’s 2015 GDP per capita of US$10,000 will climb at an annual rate of 9.8% over the next five years. Then, there’s Thailand – the Land of a Thousand Smiles has a GDP per capita of US$5,000 in 2015 and this is expected to increase at 5% per year till 2020.
  7. The high GDP per capita of Singapore makes it a prime market for the retail of luxury items. Hour Glass Ltd (SGX: AGS), which deals in luxury watches, is one example of a Singapore-listed company that is in the business of luxury retail in Singapore. Frost and Sullivan cautioned in its report that Malaysia intends to position itself as a duty-free shopping destination. The market researcher also noted that Thailand’s tourist arrivals are likely to exceed Singapore’s in the future.

What I’ve shared above only represents a tiny sliver of the information found in Frost and Sullivan’s report, so do check it out. Here’s the report again.

Anyway, as investors, we might prefer to have economic tailwinds behind our companies, rather than headwinds.

For more investing insights and to keep up to date on the latest news in the world of finance, you can sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.