Why are South-East Asian emerging markets so attractive for FDIs?
Healy Consultants Group PLC
21 April, 2015
Foreign direct investments in South-East Asia are steadily increasing over the past three decades. While the usual suspects, Malaysia, Singapore and Indonesia are leading the region in terms of gross increase, there are two great performers, which emerged as favourable foreign investment jurisdictions, in the past few years Myanmar and Brunei.
Myanmar investment climate
FDIs into Myanmar have increased at a growing pace over the past few years, rising from US$3.35bn in the 2013/14 fiscal year to US$6.62bn in the last three quarters of 2014. With simple calculation and taking in to account the continued inflows since the start of the New Year, the growth in investment has exceeded 100% year-over-year, which is an impressive feat for a country ravaged by civil war not long ago.
But why has Myanmar became so attractive to foreign business? The country allows 100% foreign ownership in many sectors in contrast to many of its neighbours. Entrepreneurs optimize their investments by routing them through Singapore, which accounts for more than half of the investments last year. The Lion City has enough capital to spend and now accounts for US$3.8bn to the US$6.62bn. This popularity is further bolstered as the country is a regional headquarters for foreign firms in the region
Myanmar was heavily sanctioned by the US up until 2011. The country has sufficient population, cheap labour and almost no industrialized production, thus boasting many business niches for foreign investors.
Brunei Investment Climate
Brunei is a small country which enjoys oil-rich natural resources to boost its economy. Crude oil accounts for almost all of the exports of the country in the past decade, which is not a winning strategy in the long run (judging from Norway's experience). The Brunei Government understands that relying too much on oil exports can be problematic and aims to diversify the economy by welcoming foreign direct investments via new policies and attractive incentives.
FDIs in Brunei have increased at the same quick pace as Myanmar, doubling to almost US$2.5 bn in 2014 from US$1 bn in 2011. These investments account for almost 10% of the GDP in the country. Singapore again plays a vital role as headquarters for the investors due to the close proximity and reputable business laws, protecting investments.
We suggest foreign investors to focus on the Brunei's BioInnovation Corridor which aims to house what is said to be the biggest concentration of halal production companies in the World, a pivotal centre for the halal industry in the region. There are more than 400 million Muslims in both Indonesia and Malaysia, thus investments in halal food, cosmetics, pharmaceuticals and logistics will reach more than sufficient markets, with growing middle class. The Government aims for its halal products output to reach US1 trillion in the next couple of years an impressive feat for Brunei itself.
To learn how to invest efficiently in Myanmar visit this guide below:
To invest in booming Brunei, visit this page below:
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