South-east Asia is increasingly viewed as a priority by
international business. The ten member states of the Association of South-East
Asian Nations (ASEAN), dominated by Indonesia, have over 600m people and by 2018
we think their economies will be growing as fast as China's and will be as big
as Germany's. That's globally significant.
It won't be plain sailing,
however. Doing business in the region can be exceedingly difficult. In our
assessment of operational risk, which takes into account political, policy and
business risks, we rate Indonesia, Vietnam and the Philippines as having a
relative risk score of over 50 (on a 100 point scale), with Thailand not far
behind. A key problem for foreign firms is the varying welcome they receive
across the region: Indonesia recently increased the restrictions on foreign
investors in retail and banking, while in Vietnam—despite a generally welcoming
government—foreign firms have been the target of violent protests.
ASEAN
countries are in the process of establishing a free trade zone, with the hope
that regional integration in sectors such as automotive will increase the attraction of
the region. The rhetoric is good, but ASEAN is notorious for slow progress, so
firms won't be betting on a quick conclusion to the negotiations. The Economist
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