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Asia House
GSK
HSBC
Baker & McKenzie
Kroll Associates
Kris Energy
Berry Appleman Leiden

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Marsh
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Chandler & Thong

Petrofac
PwC
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CIMB Bank
RMA Group
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DFDL
Diageo
SICPA Asia Development
Introduction
Promise of new era draws foreign investment
Messages
H.E. Le Luong Minh: Secretary General
US-ASEAN Business Council
EU-ASEAN Business Council
UK-ASEAN Business Council
Business - Finance - Legal
Integration and collaboration - How businesses can capitalise on ASEANs growth story - HSBC
Corridors and connections - Baker McKenzie
The Myanmar frontier: Making it work - PwC
The long road ahead: Implementing the Asian Economic Community - DFDL
Legal regime of ASEAN - Chandler & Thong-ek Law Offices
Challenges for investors to and from frontier markets - Kroll
Immigration in ASEAN: Planning for the challenges - Berry Appleman & Leiden
Building national capabilities and facilitating trade through secure regional supply chains - SICPA
Energy
Further investment needed to develop oil & gas resources
ASEAN Oil & Gas: Turning a vision into reality - Kris Energy
Industry & Manufacturing
Manufacturing moves up the value added chain
Diageo: Growing responsibly across Southeast Asia - Diageo
Emerging market specialist RMA increases ASEAN presence - RMA Group
Infrastructure
Spending on infrastructure accelerates
Railway projects promise huge regional benefits
New container ports strengthen ASEANs global reach
Aviation
Focus on airport investment intensifies
Regions aviation expansion surges ahead
Aircraft Maintenance Repair and Overhaul (MRO) services continue to grow
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ASSOCIATION OF SOUTHEAST ASIAN NATIONS
Contents
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29
34
39
42
45
47
51
55
60
64
68
72
77
82
87
90
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IT & Telecommunications
ASEANs digital advance
Mining
Region seeks sustainable model for its mining sector
Agriculture
Agriculture is ready to meet its challenges
Healthcare
Healthcare offers many opportunities for the private sector
Education
Educational development is a key economic strategy
Tourism
Tourism is Southeast Asias fastest growing sector
Country Reference
Member country profiles
Useful contacts
Inside back cover
Marsh
asean
www.asean.org
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INTRODUCTION
Introduction: Promise of new

era draws foreign investment
2015 will be the most significant since the inception of the Association of
Southeast Asian Nations when the ASEAN Economic Community (AEC)
is due to come into being at the end of the year.
The AEC will initiate a single market, comprised of the ten member
nations, 48 years after the Association was first agreed by its founder
members - Indonesia, Malaysia, Philippines, Singapore and Thailand.
ASEAN membership has seen the economies of these countries and
those of Brunei Darussalam, Vietnam, Lao PDR, Myanmar and
Cambodia who joined later, expand and consistently exceed average
global GDP growth in recent years. Almost all of the ten ASEAN
economies are expected to achieve growth rates of 5% or above in 2014.
This growth and the promise of the AEC, are generating a wide range of
opportunities for business and investment. ASEAN continues to work to
remove trade barriers between member states. Tariffs on goods are now
close to zero in many sectors for trade between Brunei Darussalam,

Indonesia, Malaysia, Philippines, Singapore and Thailand.
The single market will provide an unrestricted flow of goods, services,
investment, skilled labour and a freer flow of capital between the
members. Many benefits are promised, including access to a larger
market and a reduction in trade barriers. This is an incentive to global
companies setting up in the area, as well as local enterprises.
While more liberalisation is being negotiated, there is a growing
development of trade flows within the Region itself. Intra-regional trade
with Indonesia, Singapore and Thailand in particular is increasing and
other markets are also expanding.
According to Philippines Finance Minister, Cesar V Purisima, the growth
of inter-ASEAN trade has outpaced the growth of world trade in the past
three years. That just shows the benefits of a more connected, more
5
harmonised ASEAN, which, if it were a single country, would have the

third largest population and a GDP of more than US$2 trillion, he says.
Companies in the Region, particularly those of Singapore, Malaysia and
Thailand are going international by expanding first across ASEAN
borders and then to the rest of Asia and beyond to Europe and the US.
ASEAN is firmly set to be at the crossroads of global business in the
twenty first century. Singapore is the fourth highest ranked country in the
McKinsey Global Institutes Connectedness Index, which among other
measures tracks inflows and outflows of goods, services and finance.
Malaysia in 18th place and Thailand in 36th, also rank in the top 50 most
connected countries in the Index.
Some of Asias largest Free Trade Export Development Areas are located
in the ASEAN area. These include the Batam Free Trade Zone developed
by Singapore and Indonesia, Thailands Southern Regional Industrial
Estate, Indonesias Tanjung Emas Export Processing Zone, the Port Klang
Free Zone in Malaysia, Vietnams Tan Thuan Export Processing Zone and
the Thilawa Special Economic Zone being developed in Myanmar.
Analysis by Bank of America Merrill Lynch, drawing on national statistics,

suggests that in 2013 Foreign Direct Investment (FDI) flows into ASEANs
largest economies of Indonesia, Thailand, Malaysia, Singapore and the
Philippines surpassed those going into China. According to the Bank, FDI
inflows into these five countries rose by 7% to US$128 billion, US$4
billion more than went into mainland China, an indication of ASEANs
growing importance in the global economy.
The availability of manufacturing and logistical facilities in the Region, in

addition to competitive cost structures, are increasingly drawing the
attention of investors and multinationals southward from China to the
ten dynamic ASEAN economies.
For investors, it is also a question of future potential. Even though all the
members involved are at different stages of development, they all share
immense growth potential and comprise a major global hub of
manufacturing and trade.
INTRODUCTION
In the long term, ASEAN could be the worlds fourth largest single
market by 2030, and with lower manufacturing costs than Japan and
China. The Jakarta based Economic Research Institute for ASEAN and
East Asia estimates that the combined GDP of ASEAN members could
more than double from its present level to US$4.5 trillion by 2030.
ASEANs economic vision is ambitious and stretches beyond 2015. In
addition to its own integration, it is the groups policy to push ahead
with the integration of its many different Free Trade Agreements into
one over arching accord. The goal is to establish by 2015, an umbrella
trade deal known as the Regional Comprehensive Economic
Partnership (RCEP) with Australia, China, India, Japan, South Korea
and New Zealand.
The round of talks with RCEP which began in May 2013, aims to reach
an accord that will create an integrated market across the Asia-Pacific
of some 3.4 billion people with a combined GDP of US$21.4 trillion.
The attractiveness of ASEAN for foreign investment will be further
enhanced by formation of the Trans Pacific Partnership Free Trade
Pact. This is being negotiated by Brunei Darussalam, Malaysia,
Singapore and Vietnam with Pacific Rim countries which comprise the
US, Canada, Chile, Peru, Mexico, Australia and New Zealand.
By developing economic ties, interdependence in the Region is
increasing and the risk of conflict has diminished. ASEAN has not
focused solely on its economic and social development role but also
acts as a political stabiliser, through its network of dialogues on issues
ranging from maritime security, health and climate change.
ASEAN executed much influence to spur political change and reform
in Myanmar. The process of change now underway is testimony to
ASEANs effective, but little noticed soft power. Myanmar now
increasingly open to regional and international investment is likely to
emerge as another big winner as a result of the AEC and the many
opportunities for increased trade that it will encourage.
With its policy of quiet, cautious and preventive diplomacy, ASEAN
has managed to achieve peace and stability. Slowly but steadily, its
members are integrating their economies and institutions, making the
group a respected political force in the Region, says Willem Blankert,
former EU Special Advisor for Relations with ASEAN.
Within a group of nations of such differing ethnicities, cultures,
languages, religions and political histories, each step towards integration
has involved lengthy discussion and is likely to continue to do so.
Not every detail may have been addressed by the end of 2015, but the
evolving AEC is a powerful declaration of intent and promises to boost
investment as well as increase prosperity in Southeast Asia. Further
integration of the member countries will also make the Region a more
powerful engine in the global economy.
7
asean
H.E. Le Luong Minh,

Secretary-General, ASEAN
H.E. Le Luong Minh: Secretary-General of ASEAN

ASEAN remains on track towards the ASEAN Economic
Community (AEC). We have been unwavering in our
commitment to develop ASEAN as a single market and
production base that is at the same time highly
competitive, equitable and outward looking. As of midAugust 2014, ASEAN has implemented 82.1% of the 229
prioritised key deliverables by focusing on priority areas
and measures that potentially have the most impact in
achieving the AEC.
The latest ASEAN statistics showed that in 2013, the
Region recorded real Gross Domestic Product (GDP)
growth of 5.1%, with international merchandise trade
and Foreign Direct Investment (FDI) posting an increase
of 1.4% and 7.1%, respectively.
In terms of nominal GDP, ASEAN GDP increased from
US$2.3 trillion in 2012 to US$2.4 trillion in 2013, with the
per capita GDP reaching US$3,837 in 2013 from
US$3,761 in 2012.
All these achievements are the results of the individual
and collective efforts of our ASEAN Member States,
reflecting our commitment and resolve to achieve the
AEC in 2015.
For many years now, ASEAN has been undertaking
various initiatives to promote ASEAN as a single
investment destination. With the ASEAN Comprehensive
Investment Agreement (ACIA), covering the four pillars
of liberalisation, protection, facilitation and promotion,

we aim to increase ASEANs stature to attract more
investments in the Region.
To have greater awareness and ensure broad
stakeholder support, we are also actively undertaking
key promotional measures, which include: a website, an
updated compendium of investment rules and
regulations of Member States and three publications
namely the ASEAN Investment Report 2013, ACIA
Guidebook for Investors and the Handbook on ACIA for
the Investment Promotion Agencies.
Forming part of ASEANs grand plan to create a single
market and production base and a single investment
area, our initiatives, especially under ACIA, are all
designed to provide greater transparency, instill
confidence and support greater industrial
complementation and specialisation among ASEAN
Member States. These should, in turn, not only generate
more opportunities and redound to the benefit of the
ASEAN business sector, but also to the rest of our
Community as well.
Working more closely and together with the private
sector, ASEAN will pursue the enhancement of the
investment climate of the Region, building an ASEAN
Community that is competitive, fully integrated and
networked into the global economy.
MESSAGES
Alexander Feldman, President,

As the US-ASEAN Business Council celebrates 30 years

working to advance the business relationship between
the United States and Southeast Asia, I can honestly say
the relationship has never been stronger than it is right
now. Every year, trade and opportunities continue to
grow. US-ASEAN bilateral trade in goods and services
continues to expand, passing the US$200 billion mark in
2012. The ASEAN Nations together make up Americas
4th largest export market and 5th largest trading
partner, supporting over 560,000 jobs here in the US.
U.S. companies continue to grow their business in
ASEAN. ASEAN hosts over US$190 billion in US Foreign
Direct Investment (FDI), the largest US commitment
in Asia. US investment in ASEAN is larger than US
investment in the BRIC countries (Brazil, Russia,
India, and China) combined. As the business
environment evolves, more opportunities will continue
to be discovered.
The ASEAN nations are strongly focused on creating
investment friendly business environments, and
responding to the needs of investors both large and
small. In August 2014, the Council completed our
annual participation in the ASEAN Economic Ministers
Meeting, where the Ministers take the time to engage
with companies, exchange ideas, and form real
partnerships aimed at improving the economic

environment. Numerous engagements throughout the
year in each ASEAN country help create a mutually
beneficial climate of cooperation in the Region.
ASEAN and its members have thought deeply about
their economic future, and put into place plans
designed to sustain and support this environment of
growth. The ASEAN Economic Community, an
ambitious effort due to take effect in 2015, will create a
single market of over 620 million consumers, linked by
the ASEAN Free Trade Area and the ASEAN Single
Window ,to create a free flow of goods and services.
The ASEAN Connectivity Masterplan will create and
develop cross-border linkages helping to bring regions
and countries together and narrow the gaps in
economic development.
As ASEAN grows and comes together, opportunities
exist across a broad variety of sectors. ASEAN needs
billions of dollars in infrastructure investment; not just
traditional roads and bridges, but broadband access,
education, and healthcare networks. ASEAN is building
its financial framework, and creating a greater system of
business to business linkages. Growing incomes create
opportunities for export. I encourage you to take the
time to learn what ASEAN can offer you.

With the implementation date for the ASEAN Economic
Community (AEC) coming increasingly close, now is a
very opportune time for the international business
community to take a closer, and more serious look at
ASEAN as a dynamic and rapidly developing region for
trade and investment. European businesses are well
placed to take advantage.
Francois Guibert, Chairman,
The trade relationship between the EU and ASEAN is

extremely important to both parties and it is an
undeniable fact that trade and investment between
Europe and ASEAN is strong and growing. As such, it is
the view of the EU-ASEAN Business Council (EU-ABC)
that Ministers, Senior Officials, Multi-national
Corporations and Businessmen in both regions should
pay more attention to the development and
enhancement of trade relations between these two
complimentary blocs.
As the recognised voice for European Business within
ASEAN, the EU-ABC works to improve the trading
environment both between the EU and ASEAN and
within ASEAN for its members, through interaction with
the relevant stakeholders and advocating for the
liberalisation and opening up of the trading
environment in a constructive and inclusive way. This is
why we generally welcome the intention behind the
AEC and why we collaborate with ASEAN as it moves to
implement the final building blocks of the AEC. We also
10
support the establishment of Free Trade Agreements

(FTA) between the EU and various ASEAN Member
States and encourage all parties to move forward on
those as quickly as possible (and, hopefully, eventually
an EU-ASEAN FTA).
Well over 10,000 European businesses have a presence
in ASEAN, many using the Region as their base for all of
their Asia operations and the EU is ASEANs largest
investor, accounting for around 20% of inward Foreign
Direct Investment (FDI) in ASEAN in 2012. But this
investment is not all one way. Indeed, ASEANs FDI to
the EU has doubled in recent years now standing just
below 90 billion.
Additionally, ASEAN is the European Unions third
largest trading partner outside of Europe, with trade in
goods and services totalling some 235 billion in 2012
and the EU is ASEANs 3rd largest trading partner after
China and Japan, accounting for around 13% of ASEAN
trade. What is more, this trading relationship has been
growing at a considerable rate, with imports from
ASEAN to the EU increasing by 9.1% between 2009 and
2013, and the trade in goods in the opposite direction
rising by nearly 13%, demonstrating a clear
interdependence between the two regions.
EU-ABC stands ready to lend support to both its
Members and to ASEAN in what promises to be an
exciting and important year for Southeast Asia.
MESSAGES

It is clear that economic power in the world is shifting
east. The IMF predicts that Southeast Asias economy will
grow by 5.4% in 2015. Because of this predicted growth,
business as usual for UK companies is not an option according to a recent report produced by Oxford
Analytica for Prudential.
Kevan Watts, Chairman,

The report suggests that the UK faces an important

choice in its trade and investment strategies: focus on
maintaining the status of its current partnerships,
primarily with slower growing EU partners; or increase
the pace of its shift towards the fast rising emerging
markets. The report predicts the future dominance of
Asia to the extent that by 2050 it will have an estimated
50% of world trade, compared with 20% today.
Total UK exports to the six largest ASEAN economies Indonesia, Thailand, Malaysia, Singapore, Philippines,
and Vietnam are equivalent to over three times the UKs
exports to Brazil, twice Indias, and 50% more than
Japans. UK goods exports to ASEAN are rising more
rapidly than British exports globally and UK services
exports to ASEAN exceed those to either mainland China
or Japan.
Although a region of ten diverse markets, the roadmap
towards economic integration - the ASEAN Economic
Community (AEC) will emerge at the end of 2015. The

AEC will create opportunities for even greater trade and
investment to the benefit of both ASEAN and the UK. The
UK is also playing a key role in building 21st century
networks by shaping the next generation of global trade
through EU Free Trade Agreements with ASEAN member
states, the first of which has been signed with Singapore.
These agreements are important to help drive UK
exports and also encourage Foreign Direct Investment
into the UK from Southeast Asia.
The UK is well placed to play a key role in what is being
dubbed the Asian Century. It has a strong trading
relationship with ASEAN, but more UK companies need
to position themselves to take advantage of the predicted
increase in the level of opportunities in ASEAN over the
coming decades.
The UK-ASEAN Business Councils (UKABC) key role is
to bang the drum about ASEAN and encourage UK
companies to consider, explore and then invest in
ASEANs ten incredibly diverse, high growth markets.
Through the UKABCs signposting of in depth
information, relevant events, visits to the markets and
local delivery partners, UK companies are in a better
position to make informed choices about their
investment/export strategies in this region.
11
BUSINESS - FINANCE - LEGAL
Integration and collaboration - How businesses

can capitalise on ASEANs growth story
Simon Constantinides, Regional Head of Global Trade and Receivables Finance, Asia Pacific, HSBC
Simon Constantinides, HSBCs Regional Head of Global
Trade and Receivables Finance for Asia Pacific, explains
why ASEAN based companies, as well as those further
afield, are well-positioned to capitalise on the
opportunities made possible by regional trade flows
and the unique resources of each member state.
CASE STUDY: HSBC
Simon Constantinides
The distraction of China's growth has seen much of the

world overlook one of the greatest trading opportunities
of the post-global financial crisis economy: ASEAN.
The Region has exceptional potential, as collectively
the ten members of the Association of Southeast
Asian Nations (ASEAN) comprise a market of more
than 600 million people with a combined GDP of
some US$2.1 trillion1. In addition, the Region offers
sustainable economic growth, low manufacturing costs
and a rising middle class who are hungry for the
consumer experience.
A decade ago, the majority of Western companies that

came to Asia identified China as the preferred option
when setting up manufacturing facilities. They were
encouraged by the nations competitive wages,
developing infrastructure and the vast opportunities
presented by its domestic market. However, this is
beginning to change as Southeast Asian markets become
more accessible and increasingly cost-competitive.
In 2013, Foreign Direct Investment (FDI) into China
increased by almost 10% year-on-year, reaching
US$117.6 billion2. However, FDI into just the top five
ASEAN economies3 for the same period overtook this
figure for the first time in 2013 with a 7% jump year-onyear to US$128.4 billion4.
ASEAN trade, past to present
Since the Associations formation in 1967, economic
growth throughout the Region has been exponential.
13
and chemicals - and acts as the Regions financial hub. As such, ASEAN
boasts all stages of the value chain, which in turn, has made it a highly
competitive trading bloc. Furthermore, each member state has built up
a competent labour force in their respective sectors.
Stemming from this, the trading opportunities for businesses from all
corners of the Region are staggering. Not only can they look to trade with
counterparties from neighbouring ASEAN states, but they can also
capitalise on trade flows that carry goods to China, India and the rest of
the world.
CASE STUDY: HSBC
For instance, in 1975 manufactured goods made up around 18% of

ASEAN exports. Yet by 1991 its share was around 63%5. Between 2010
and 2013, the Associations GDP grew by more than 27%6. Trade with
China and India, which rose from a total of just under US$42 billion in
2000 to more than US$391 billion in 20127, contributed greatly to this rise.
14
A key factor behind ASEANs success is its diversity. Looking across the
various member states, there are frontier markets like Cambodia, Laos
and Myanmar that are largely untouched by foreign investors, but which
manufacture low value goods such as agri-commodities and export
them elsewhere; there is Vietnam, which has now become a hub for
textiles, garments and footwear; there is Malaysia and Indonesia, both
with a huge commodities base and, in the case of the former, has
become very strong on the technology front; and there is Singapore,
which houses high value chain industries - including pharmaceuticals, IT
Indeed, the burgeoning growth of trade volumes between each

member state has given rise to the proposed ASEAN Economic
Community (AEC), which is due to commence in 2015. Among many
other goals, the AEC aims to encourage inter-regional trade and
investment, free movement of capital, and freer movement of skilled
labour. Furthermore, it is hoped that the communitys formation will
boost the Regions competitiveness within the global economy and thus
expand on the trade and investment opportunities currently presented
to the Region.
In Indonesia, for instance, producers of commodities and other low
value goods could capitalise on the trade routes that carry coal from the
archipelago to Japan and South Korea, which is eventually used to make
steel. From the beginning to the end of its journey, the coal will pass
through various ports. The movement of this coal is heavily reliant upon
people and infrastructure, which could be used to help shift other

commodities and manufactured goods along the same route.
Likewise, Malaysias particular expertise in manufacturing high-tech
goods could encourage other industries that involve similar skill sets.
This too provides opportunities for various manufacturers from other
ASEAN states.
Trade facilitation
A key challenge associated with inter-regional trade, is that member
states are at vastly different levels of development and market
sophistication. With regard to labour, some markets are less open to
foreign workers than countries like Singapore. This is particularly
challenging when companies are looking to upskill their staff, yet do not
have the management in place to transfer knowledge and expertise. In
the financial services industry, for instance, there are certain markets
where it is very hard to find skilled workers, which has had a detrimental
impact on the sophistication of banking services offered in such places.
The same can be said for IT and other high value chain industries, which
means that unless certain countries modify their labour laws, these
places will be unable to rise further up the value chain.
Infrastructure, too, plays a significant role in the facilitation of trade and
investment, as without ports, railways, highways and airports,
commodities, manufactured goods and people are simply unable to
move elsewhere. Across ASEAN there are examples of where
infrastructure development has significantly led to GDP growth.

Singapore is a fine example of this. However, there are countries where
connectivity remains a big challenge. In Indonesia, infrastructure
development cannot keep pace with the nations burgeoning economy,
which causes bottlenecks in the supply chain. In addition, transportation
costs are among the highest in Asia, which impacts the efficiency and
profitability of trade. Frontier markets such as Cambodia, Laos and
Myanmar are attractive to businesses because of their low wage
workforces, but the infrastructure needed to transport goods from these
economies are greatly underdeveloped. In the wake of the Thai floods
of 2011, companies have learnt that having just one plant in a particular
15
destination exposes them to production risks. Corporations are

therefore back to operating in multiple locations or are using several
suppliers for the same goods.
they may appear today. Nevertheless, it will take much collaboration

between importers, exporters, services providers and government
agencies to remove these hindrances.
Regulatory transparency and consistency of financial services are other

areas required to facilitate trade. With regard to the former, markets
need reporting systems and processes in order to guide companies on
what they need to do to make trade and investment easy and hassle
free. Furthermore, ASEANs markets must enforce strict rule of law and
bring their local regulations in line with one another. Without these,
businesses cannot trade effectively throughout the Region. Banks too
must play their part in enabling businesses to achieve their growth
ambitions. Apart from performing in a transactional capacity, they
must also act as a voice for their customers when speaking to
regulatory authorities. Banks must also ensure that they are governed
to the highest of standards.
In addition, the introduction of the AEC will also go some way to

alleviating these challenges. With each member state promoting the
free flow of goods and services, investment and capital, and skilled
labour, they will be removing many of the barriers that stand in the
way of inter-regional trade.
Collaboration and future growth

All the above challenges can be overcome, irrespective of how large
http://investasean.asean.org/index.php/page/view/about-the-asean-region/view/707/newsid/932/integrated-asean.html
http://www.industryweek.com/finance/foreign-direct-investment-china-rebounds-53-2013
3
The Asean-5: Indonesia, Malaysia, Thailand, Philippines and Singapore
4
http://focus-asean.com/foreign-direct-investments-china-focus-asean-2
5
http://www.asean.org/communities/asean-economic-community/item/industry-focus
6
http://www.asean.org/images/resources/Statistics/2014/SelectedKeyIndicatorAsOfApril/Summary%20table_as%20of%2030Apr14_upload.pdf
7
http://www.asean.org/images/resources/Statistics/2014/ACIF%202013.PDF
1
CASE STUDY: HSBC
16
What is clear is that opportunities for ASEAN based businesses are in

abundance, and that these will grow further with the advent of the
AEC. While vast openings are being created, almost 50% of global
GDP is derived from international trade, creating jobs and sustainable
businesses and improving communities, companies will need to
approach these new opportunities with some caution. A trade bank
willing and able to work with regulators in order to make international
trade and investment easier, and fully aware of the many pitfalls
associated with particular economies, is an essential partner.
Corridors and connections

Baker & McKenzie
The rise of emerging markets is well known. But less widely appreciated
are the deepening connections between them. As the flows of trade,
investment, and ideas between emerging markets grow, what does it
mean for corporate strategy?
Patterns of globalisation change constantly. With each successive era,
economic corridors emerge and disappear, trade and investment flows
rise and fall, and cultural connections wax and wane.
CASE STUDY: BAKER & MCKENZIE
A little over two thousand years ago, the world witnessed the first such
corridors appearing. Merchants, monks and adventurers from China
forged new trade routes into India, Central Asia, the Middle East, and
beyond. Silk and jade were exchanged for spices, gold and horses.
Language, philosophy, ideas and technology spread as people grew ever
more connected. The lands that lay along these Silk Roads saw their
prosperity fuelled by growing trade and cultural exchange.
18
Today, the world is once again seeing the rapid emergence of new
economic corridors as the world economy undergoes profound change.
The pace of this change is faster than anything that humans have
witnessed before. And the implications for business will be sweeping.
These new economic corridors and connections are founded on three
mega-trends:
The inexorable rise of emerging markets;
The growing connections and links between the worlds emerging
markets as they grow richer;
And the central role that Asia is playing in this new landscape of
deepening connectivity.
Consider three seemingly unrelated data points from the year 2010. In
Latin America that year, Chinese banks doubled their lending to US$37
billion - so providing more financing to the continent than the World
Bank and the Inter-American Development Bank combined1. Over in
Africa, 2010 witnessed the regions biggest ever acquisition when
Bharti Enterprises of India paid US$10.7 billion for the African
operations of Zain, a Kuwaiti telecoms group. Meanwhile in Thailand,
tourist arrivals from the Middle East grew by 17.5% to reach 560,000,
many of them seeking healthcare from the countrys growing medical
tourism industry2.
On the surface, these data points seem unconnected. And yet, together
they point to a significant shift in the pattern of global economic activity.
Together, they point to a set of rapidly deepening links between the
worlds emerging markets. Where once the countries of the emerging
world barely spoke to each other, today they are connecting and
integrating at breakneck speed. And sitting at the heart of all these
connections is the continent of Asia.
Companies have long been aware of the rise of emerging markets.
Indeed, many now refer to them as High-growth markets. But few
have recognised the significance of deepening links between these
nations. As companies plan for the future, these connections and Asias
central role in the emerging market universe are of critical importance.
The purpose of this report is to explore what these new economic

corridors mean for business, and how companies are responding.
Emerging or high-growth?
The term emerging markets refers to countries at a relatively lower
level of economic and institutional development compared to rich
countries such as the US or Germany. But in recent years it has become
fashionable to refer to emerging markets as high-growth markets. In
part this is to avoid giving offense, but mostly it is about recognising that
economic growth in the emerging world is generally higher than in the
developed world.
Shane Tedjarati, President of global high-growth regions at Honeywell,
a US technology group, changed the term emerging markets to highgrowth at his company for two reasons. The term emerging
somehow suggested that these markets will be important in the future
rather than now. But the fact is that they already drive 50% of the
growth at Honeywell, he says. The second reason for the change is
that inside our company there is a nuanced, subtle difference when
you talk about emerging versus high-growth, when someone talks
about an emerging market they can put it as a second or third or fourth
priority. But when were beating the drum every day, telling people
these are high-growth, you get them to pay attention and resource
them appropriately.
Emerging markets/high-growth markets: The countries of Asia (exJapan), Oceania (ex-Australia and New Zealand), Africa, the Middle
East, Central and Eastern Europe, South and Central America and
the Caribbean.
Developed/mature markets: The countries of North America,

Western Europe, Japan, and Australia and New Zealand.
North-North trade: The trade that occurs between developed nations.
North-South trade: The trade that occurs between developed nations
and emerging countries.
South-South trade: The trade that occurs between emerging countries.
19
Demographics are attractive, with emerging markets

having young, rapidly expanding workforces.
Urbanisation is another powerful force.
The rise of emerging markets
The poorer parts of the world are catching up with their richer peers and
this catch-up looks set to continue
After many decades of under-performance, the emerging world began a
remarkable journey around 2003 when growth rates picked up and
overtook those in the developed world. The reasons behind this
turnaround vary. A series of debt crises during the 1990s prompted
some markets to introduce economic reforms. The rapid emergence of
China was important, especially for commodity exporters. A period of
low interest rates in the US lowered financing costs globally. Many
countries transitioned successfully to democracy.
The result was a set of conditions that allowed the emerging world to
begin catching up with the rich world. During the past ten years, the
share of the world economy made up by emerging markets has almost
doubled from 23% to 40%.
20
Most observers expect this catch-up to continue. While the emerging

world makes up 40% of global GDP, it accounts for 85% of the global
population. This imbalance suggests big potential for the emerging
world to grow faster than developed markets for many more years.
Demographics are attractive, with emerging markets having young,
rapidly expanding workforces. Urbanisation is another powerful force. In
India, 69% of people still live in rural areas. As they migrate to towns,
swapping farms for factories, their incomes rise.
The middle class is expanding, providing giant new pools of spending
power and creating the conditions for entrepreneurship and innovation
to thrive and for governance to improve. The Brookings Institute, a think

tank in the US, calculates the global middle class will rise from 1.9 billion
in 2009 to 4.9 billion by 2030. The extra three billion consumers will be
found entirely in emerging markets.
Unsurprisingly, companies around the world are switching the focus of
their investment. In 2012, the value of FDI that went into emerging
markets exceeded the amount put into mature markets for the first
time ever.
Deepening connectivity between emerging markets
As emerging markets get richer, patterns of globalisation are changing.
The fastest growing economic corridors today are the ones springing up
between different parts of the emerging world
Looking at globalisation over recent decades, several distinct phases are
clear. At the end of World War II in 1945, the global economy was not
only damaged, but deeply divided. From this low point, the Western
nations began to promote global integration as a way of ensuring
peace, and the 1950s, 60s and 70s saw a flourishing of cross-border
trade and investment.
However, most of these new economic connections were between rich
world neighbours. It was about Europe and North America deepening
their relationships with each other. It wasnt until the 1980s and 1990s
that the emerging world got involved in a serious way.
Trade barriers in the emerging world began to fall. At the same time,
communications, IT and transport technology improved markedly, so
opening up new economic corridors connecting the rich world with the
emerging world. While the economic linkages that grew up after World
War II centred on North-North relationships, these new connections
were aligned on a North-South axis.
Part of the story was about the West seeking energy and raw materials,
but just as significant were new global supply chains accessing cheap
labour. As these North-South connections grew, they fuelled economic
growth in emerging markets, lifting their wealth and incomes. Emerging
markets began to offer not just production opportunities, but market
opportunities too.
This, in turn, has led to a third phase of globalisation in the post-1945
era, in which emerging markets are now building connections among
themselves. These deepening South-South connections show up in
many ways. Take exports. The share of global trade that occurs between
emerging markets (South-South trade) rose from 11.7% in 1995 to
25.1% in 2012.
Or consider flows of Foreign Direct Investment (FDI), which includes
mergers and acquisitions. Globally, most FDI going into emerging
markets still comes from companies in mature countries. In 2012, they
contributed 56% of all FDI inflows to the emerging world.
However, in some regions it is now emerging countries that are the
biggest investors. In the Middle East and Africa, for example, 70% of the
FDI in 2012 came from companies based in other emerging markets. Its
tempting to think that these investments are focused on natural
resources. But this is not true. In Africa, less than 20% of FDI went into
commodities. In the Middle East, the figure was less than 1%.
This picture of deepening connectivity between emerging markets has

only just begun. In the years ahead, the value of trade and investment
that flows along these new corridors will continue to rise. So too will the
flow of ideas and innovation and people.
Of course, many obstacles must be overcome. Trade and investment
barriers - such as tariff rates and foreign ownership restrictions - remain
large. But this suggests big potential for connectivity to rise as the
barriers are dismantled. Consider the progress being made by the
Association of Southeast Asian Nations (ASEAN). Not only are trade and
investment barriers coming down within the ten nation bloc, but ASEAN
is also setting up free trade agreements with its neighbours, such as
China and India.
A further barrier to emerging market connectivity is the weak state of
infrastructure such as ports and roads. But again, these deficiencies are
likely to be addressed. One of the most intriguing infrastructure gaps is
the digital divide. Cisco, a US telecoms equipment group, reckons
another three billion people will connect to the internet in the next
decade - all of them in emerging markets.
If you think about the possibilities for digital connectivity between
emerging markets, its going to be a huge opportunity for value
creation, says Wim Elfrink, Ciscos Chief Globalisation Officer.
As incomes in the emerging world continue to rise, as infrastructure gets
built, as consumers become digitally connected, and as trade barriers
continue to fall, the momentum behind South-South connectivity will
build and grow.
21
Asia's centrality to emerging market connectivity

New economic corridors between emerging markets are rising in
many places, but Asia has rapidly taken a central role in this growing
web of interconnectivity
Within this landscape of deepening connectivity, not all regions of the
emerging world are equal. The most important part is Asia (ex-Japan),
thanks largely to its sheer scale.
Emerging Asia is home to 54% of the worlds population, and made

up 20.4% of the global economy in 2013. By contrast, all the other
emerging markets combined, accounted for only 31% of the global
population, and 19.5% of the global economy. Whats more, Asia is
growing faster than other regions, so its dominance will continue to
rise for some time.
22
Looking at trade between emerging markets, Asia has long been the
dominant region. Indeed, in 2013 three quarters of all South-South
exports went to Asian destinations. Partly this is because many
countries in Asia, notably China, are short on commodities and so
must import oil, iron ore and food. Partly too, it is due to the changing
character of global manufacturing.
1
2
In recent decades, production chains have fragmented. Rather than

make a product entirely in one country, manufacturing processes
have been broken up into ever smaller parts, with each located in the
country where it can be done most cost-effectively. This
fragmentation of manufacturing has been particularly acute in Asia,
and now distorts the regions dominance of South-South trade
because components flow across Asias borders many times before
reaching their final destination.
Nonetheless, neither of these factors diminishes Asias importance to
South-South trade. With commodities, it means that Asias rising
demand has become a major engine for commodity producers such
as Brazil. And the fact that Asias cross-border production networks
have become so deeply integrated, means the region is now the
dominant centre of global manufacturing.
Asias dominance shows up just as clearly in flows of FDI. In 2012, Asia
(ex-Japan) accounted for two thirds of all the FDI originating from
emerging market companies. This rising wall of money is washing into
other emerging markets, making Asian companies the dominant
investors in this South-South story.
McKinsey Global Institute

Thailand Ministry of Tourism
From silks and spices to dollars and devices: What Asias deepening links with other high-growth markets mean for corporate strategy is an Economist Corporate Network
(ECN) report, sponsored by Baker & McKenzie. The ECN performed the research, and wrote the report independently. The findings and views expressed in this report
are those of the ECN alone and do not necessarily reflect the views of the sponsor.
Where global insights meet local needs
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2014 PricewaterhouseCoopers Myanmar Co., Ltd. All righ

hts reser ved.
Photgrapher by Foo Chee Kim
PricewaterhouseCoopers
Myanm
mar Co., Ltd
Jovi Seet
Seniorr Executive Director
+959 440230 341
jovi.s@
@mm.pwc.com
Jasmine Thazin Aung
Director
+959 450023 688
jasmin
[email protected]
Room 6A, 6th Floor,
Centreepoint T
To
owers, No. 65,
Corner of Sule Pagoda Road
and M
Merchant Road,
Kyauk
ktada Township,
Yangon, Myanmar
+951 378661, 378961
The Myanmar frontier: Making it work

Jovi Seet, Senior Executive Director, PwC Myanmar
Frank Debets, Managing Partner, PwC Worldtrade Management Services Asia
Overview
As multinationals look to escape the slow-growth
constraints of the developed world, frontier markets
such as Myanmar hold great promise. The opportunities
are obvious. Apart from a relatively untapped,
fast-growing consumer market, Myanmar is rich in gas,
oil and minerals; and it is undeveloped in major
industry sectors.
Jovis Seet
Frank Debets
As a newly opened economy, Myanmar has shown

significant progress over the last two years. The World
Bank East Asia Pacific Economic Update revealed
Myanmars real growth in 2012/2013 to have reached
7.3% with an expected increase to 7.5% in 2013/20141.
Among the main drivers of growth are foreign
investment and trade, largely as a result of its efforts to
reduce the social-political barriers to do business there

and the passing of new laws to further encourage
foreign interest.
Meanwhile, Myanmar remains a frontier, bearing both
prospects and risks with many regulations surrounding
foreign investment and trade yet to be tested and its
infrastructure yet to be developed.
On foreign investment
The introduction of the Myanmar Foreign Investment
Law (MFIL) in November 2012 improved conditions for
foreign investors across various sectors. In the last three
years (April 20112014) foreign investment into the
country reached over US$10 billion, with more than 700
foreign enterprises already given the go-ahead to
operate in the country2.
Key sectors for foreign investment

Currently, the major sectors for foreign investment are:
Sector
Infrastructure
- Power
- Transport and communication
Manufacturing
Hotel and tourism
Oil & gas
Amount invested in US$ million

(April 2011-2014)
Percentage in total foreign investment

(April 2011-2014)
4,754.7
1,353.5
2,322.0
793.1
556.9
45.5%
12.9%
22.2%
7.6%
5.3%
Source: Directorate of Investment and Company Administration,

Ministry of National Planning and Economic Development, Myanmar, 30 June 2014.
24
The largest sector for foreign investment is currently infrastructure

(roads, power plants, telecoms, airports, and other logistics) at 58.4% of
Myanmars total foreign investment received from April 2011-2014.
Company
Country
Infrastructure
China Communication Construction (CCC)
China Rail Construction Corporation (CRCC)
China State Construction Engineering Corporation
Hyundai Engineering & Construction
Ooredoo
Shimizu Corporation
Telenor
China
China
China
Korea
Qatar
Japan
Norway
Shangri-La Asia
Yoma Strategic Holdings
Country
Hong Kong
Singapore
Oil & Gas

Chevron
China National Petroleum corporate (CNPC)
China National Offshore Oil Corporation (CNOOC)
Daewoo International Corporation
Eni
Essar Global
Petronas Carigali Sdn Bhd
PTT Exploration and Production Public Company (PTTEP)
Statoil
Total SA
Royal Dutch Shell
Denmark
US
Singapore
Netherlands
Japan
Indonesia
Thailand
India
UK
Real Estate development
Japan
US
Singapore
Singapore
Bouygues Construction
Fragrant Property
Mitsubishi Corporation and Estate
Shine Group
Yoma Strategic Holdings
Tourism and Hospitality

All Nippon Airways (ANA)
Best Western
Keppel Land
Pan Pacific Hotel Group
Company
Tourism and Hospitality
Manufacturing
Carlsberg
Coca Cola Company
Fraser and Neave (FNN)
Heineken
Mitsubishi Motor
PT Hanjaya Mandala Sampoerna Tbk
Siam Cement Group (SCG)
Tata Motors
Unilever PLC
Meanwhile, the oil & gas sector is also expected to grow with the
opening of new fields. The international players in each of the key
sectors are set out below:
US
China
China
Korea
Italy
India
Malaysia
Thailand
Norway
France
UKNetherlands
Singapore
Thailand
Japan
Vietnam
Singapore
25
Investment challenges and risks to consider

While measures are taken to develop and strengthen Myanmars legal
framework, regulatory restrictions or inflexibilities persist for foreign
investors. For example, payments made in a foreign currency are not
permitted, the export of any currency or foreign exchange must be
approved by the Central Bank of Myanmar (CBM), and foreign
ownership of land and immovable property is also expressly prohibited.
For now, the Myanmar currency, Kyat, remains vulnerable to volatile
foreign exchange movement due to low international reserves (this is
expected to increase along with rising foreign capital inflow), current
account deficit resulting from higher imports, and increased fiscal deficit
due to weaker than expected revenue performance3.
Despite the risk and challenges, the pace of foreign investment by
multinationals continues to pour in, leading companies to compete for
limited resources such as talent, office space and aging infrastructure. At
the same time, this also indicates the confidence foreign businesses
have in the growth potential of the country.
On international trade
Between 2010 and 2015, exports are forecasted to double from US$7.9
billion to US$15.1 billion4. Trade is facilitated by the removal of many US
and European trade sanctions and the relaxation of some import and
foreign exchange restrictions, followed by exemptions and incentives
introduced by the MFIL.
Being a member of ASEAN, Myanmar both offers and enjoys preferential
import duty rates with nine other ASEAN countries as well as Australia,
China, India, Japan, Korea, and New Zealand. Furthermore, the
26
Photo: Foo Chee Kim
reinstatement of trade preferences to Myanmar under the European

Unions Generalized System for Preferences for least-developed
countries will provide Myanmar with duty and quota free access to the
EU market for all its exports (except for ammunition and arms).
Import tax exemptions and incentives
Exemptions and incentives have been made available to companies
registered under the MFIL and which have obtained permits from the
Myanmar Investment Commission (MIC). These companies may, at the
discretion of the MIC, be given relief from customs duty on certain
machinery, equipment, instruments, machinery components, spare
parts and materials used during the period of construction or expansion,
and on raw materials for the first three years of commercial production.
Furthermore, if investors expand their business within certain approved
time frames, they may enjoy exemptions and/or relief from customs
duty or other internal taxes on items imported in connection with the
business expansion.
Other exemptions and incentives include the suspension or
exemption of import duties and taxes on raw materials used to
produce goods for export for eligible manufacturing companies
established in Myanmar.
The customs and international trade regulatory landscape
Myanmars customs environment has yet to mature. Current
regulations do not seem to exist, or are not widely known, on common
customs topics such as classification of goods and duty drawback. There
are also overlapping responsibilities of various Ministries and
Departments which leads to confusion as to what type of approvals may
or may not be required. Uncertainty also exists around the treatment of
technical customs topics, such as classification and valuation.
Furthermore, there are also many anecdotal instances of arbitrary
treatments imposed by Customs officials to secure clearance of goods.
Action is being taken by the Myanmar Government to improve the
import/export trading environment. It is currently drafting regulations
for the implementation of the Customs and Tariff of Myanmar Law,
passed in 2012.
Looking ahead
Continuing economic and political reforms will be necessary to draw
and retain long term foreign investments and trade. Though still at its
infancy, the MFIL has begun tackling important issues such as foreign
ownership and land leasing rules. Meanwhile, efforts are underway to
improve business regulations such as enhancing investor protection,
and to develop fair and transparent terms for private sector
investments which serve the publics interest5.
Also gaining widespread attention is Myanmars upcoming Special
Economic Zones introduced as part of the Governments economic
reform efforts. These areas are currently being developed in Dawei,
Kyaukpyu and Tilawa. Once operational, they should also offer
favourable regulatory environments which often include customs
duty exemptions.
Myanmars overall economic outlook remains positive in the near
future, as we look forward to further socio-political progress, and the
development of the necessary regulations as well as infrastructure
(i.e. banking, telecoms and transportation) to improve the ease of
doing business there. Meanwhile, its long term outlook weighs, to a
large extent, on the outcome of the 2015 election and its
Governments ability to focus and carry through the countrys reforms
and economic agenda.
Preserving Stability and Promoting Growth, Word Bank East Asia Pacific Economic Update April 2014, World Bank, April 2014.
Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development, Myanmar, June 2014
3
Preserving Stability and Promoting Growth, Word Bank East Asia Pacific Economic Update April 2014, World Bank, April 2014.
4
Myanmar Economic Monitor, The World Bank Group, October 2013
5
UK awards new grant to regulate public-private partnerships, The Myanmar Times, March 2014
1
2
27
The long road ahead: Implementing

the Asian Economic Community (AEC)
William Greenlee & Adam McBeth, DFDL
William Greenlee
Adam McBeth
Myanmar's political and economic transition from a

military dictatorship to the last economic frontier in Asia
has been the subject of wide interest in the international
business community. Investors were spurred to action in
2012 with the passage of the ground breaking Foreign
Investment Law (FIL), which some would say marked
the official entry of Myanmar into the world economy.
As a country rich in natural resources and with an
estimated population of over 60 million people, it is
understandable why Myanmar has quickly become a
prime target for foreign investment.
According to the Directorate of Investment and
Company Administration (DICA), Myanmar attracted
US$4.1 billion of Foreign Direct Investment (FDI) during
the fiscal year ending 31 March 2014. This is up
threefold from the previous fiscal year, where Myanmar
received only US$1.42 billion in FDI and is nearly
double the annual average FDI amount received since
1988. This upward trend is projected to increase year
over year. A 2013 report released by the McKinsey
Global Institute projected that Myanmar would see
upwards of US$100 billion in FDI over the next two
decades, while at the same time, quadrupling its Gross
Domestic Product (GDP) over that period.
Despite the continuing reform efforts by the

Government and the staggering increase in FDI, some
investors are beginning to grow restless and demand
faster progress. Still underdeveloped legal and
regulatory regimes impose a variety of stumbling blocks
on new investors to Myanmar, frustrations which would
be eased with greater reforms. The next two years will
be vital in assessing Myanmars reform efforts. Coupled
with the need to assuage the consternation of foreign
investors demanding progress, Myanmar has numerous
treaty obligations as a member of the Association of
Southeast Asian Nations (ASEAN) with which it must
comply. To this end, the Minister of National Planning
and Economic Development announced in May 2014
that Myanmar would take all necessary steps to
implement the ASEAN Economic Community (AEC) by
the start of 2015. It appears to be full speed ahead in
Myanmars efforts to once again become a regional
economic power as it had once been.
Myanmars integration into a position of leadership
in ASEAN
Despite the recent global economic downturn suffered
by much of the Western World, the ASEAN Region has
continued to grow at a rapid pace. As a whole, the GDP
29
of ASEAN grew by 5.7% in 2012 and 5% in 2013. Myanmar however

outpaced the rest of ASEAN with its GDP estimated to have grown by
6% in 2012 and 6.8% in 2013.
Ever since it was announced that starting in 2014 Myanmar would hold
the ASEAN chairmanship for the first time, Myanmar's role with ASEAN
has been highlighted. Coupled with its accelerating GDP growth,
Myanmar is poised to be among the foremost leaders driving the
economic engine of ASEAN.
As the march towards ASEAN integration continues, Myanmar will be
responsible for delivering key targets and a clear vision that will guide
ASEAN during this critical time.
There has been some progress in issuing new laws that encourage
foreign investment however there is still a long way to go. The
Government continues to work toward this end with Ministries drafting
laws, which Parliament will reportedly review and hopefully pass up to
51 this session. Ready or not, Myanmar is obligated to make significant
changes within less than two years.
Obligation to implement AEC
In 2007, all ASEAN member states took the bold step of adopting the
binding AEC Blueprint, under which all member nations are obliged to
take various steps in order to establish AEC by the end of 2015. The
overarching goals of AEC are to transform ASEAN into: (1) a single
market and production base, (2) a highly competitive economic Region,
(3) a Region of equitable economic development, and (4) a Region fully
integrated into the global economy.
30
AEC areas of cooperation include the development of human resources

and capacity building, recognition of professional qualifications, closer
consultation on macroeconomic and financial policies, trade financing
measures, enhanced infrastructure and communications connectivity,
development of electronic transactions and integrating industries across
the Region to promote regional sourcing and enhancing private sector
involvement to establish AEC.
AEC is intended to transform ASEAN into a Region that comprises the
following core elements: (1) free flow of goods, (2) free flow of services,
(3) free flow of investment, (4) free flow of capital, and (5) free flow of
skilled labour.
Coupled with its accelerating GDP growth, Myanmar

is poised to be among the foremost leaders driving the
economic engine of ASEAN.
ASEAN Comprehensive Investment Agreement
One important aspect of achieving the aforementioned goals upon
which AEC will be built is the allowance of the free flow of investment.
This is to occur through the implementation of ASEAN Comprehensive
Investment Agreement (ACIA) by the end of 2015. The ACIA is similar in
many respects to a bilateral investment treaty.
The stated aim of ACIA is to create a liberal, facilitative, transparent and
competitive investment environment in ASEAN. ACIA is founded on
four basic pillars: (1) investment protection, (2) facilitation and
cooperation, (3) promotion and awareness, and (4) liberalisation. ACIA
applies to laws and regulations adopted by any ASEAN member state if
related to: (1) investors of a different ASEAN member state, or (2) any
investments made by an investor from a different ASEAN member state
after 29 March 2012. ACIA will initially liberalise five business sectors,
including cross-border investment in: manufacturing, agriculture,
fisheries, forestry, mining, and quarrying.
ACIA embodies international principles of good governance designed to
enhance the individual investment climates of ASEAN member states in
order to attract greater amounts of FDI. ACIA offers protection for all
ASEAN investors and their investments in other ASEAN member states.
Investments are defined to include every kind of asset, owned or
controlled by an investor. ACIA states that covered assets include, but are
not limited to: moveable and immovable property and property rights,
shares of a company, intellectual property rights, and contractual rights.
32
ACIA contains a number of provisions related directly to protecting

investors from ASEAN member states and their investments in other
member states. These protections include ensuring fairness which
prohibits member states from making arbitrary decisions and/or
discriminating against an investor from another member state in any
way. Further, if a host country decides to take legal action against an
investor that investor must be given a full and fair opportunity to defend
against any charge of wrongdoing using all legal recourse available to
domestic investors. Additionally host nations must ensure protection and
security for all investments made by a member of another ASEAN
member state. In cases of strife, including armed conflict or similar
events, the host ASEAN member state is required to compensate the
investor from the other ASEAN member state for any loss or damage to
the investment. ASEAN member states must also prevent unlawful
expropriation, allow for the free transfer of funds without delay, and
must grant entry and work authorisation to key personnel of the investor.
Lastly, ACIA provides that when an investor suffers a loss or damage due
to a breach of ACIA by a host nation then that investor is guaranteed the
right to access dispute settlement mechanisms, including the use of local
courts or international arbitration.
Further, ACIA adopts non-discrimination principles including national
treatment and most-favoured nation treatment for all ASEAN member
states. Under these principles all ASEAN member states agree not to
treat investors from another member state any less favorably than
domestic investors. ACIA additionally states that ASEAN member
Regarding Article 9 of ACIA, the individual ASEAN member states have

been instructed to submit a list of reserved matters for areas where
there will be temporarily non-conforming measures and regulations
applicable to the five sectors sought to be liberalised under ACIA.
While ASEAN members are permitted to make reservations regarding
laws and regulations that are not in conformity with ACIA, the member
states have also committed to steadily reduce or eliminate the
reservations moving forward.
ASEAN member countries, under ACIA, have reserved to their citizens
certain activities in sectors covered for liberalisation. These sectors
include: manufacturing, agriculture, fishery, forestry, mining, quarrying
and are permitted to reserve certain activities to their citizens.
Myanmar has made reservations in the foregoing sectors and will
additionally retain the prohibition on the ability of foreign persons to
transfer ownership of immovable property as well as the company
incorporation procedures for a foreign invested company.
World Trade Organisation (WTO) implications
Under ACIA, a country that is a WTO member is not automatically
given the same benefits as an ASEAN member. Despite the
WTO stating that all members be given most favoured nation status,
this does not appear to always be the case. ASEAN countries will
receive higher benefits and lower tariff rates than non-ASEAN
WTO members.
Current situation and the road forward
Myanmar is not currently in compliance with many of the provisions
of ACIA. Bringing Myanmar into complete compliance by 2015, will be
a significant task and will likely extend beyond the initial deadline
contained in ACIA. Myanmar has pledged to implement AEC on the

original schedule. However, it is possible that a number of the benefits
provided for in ACIA may have to be delayed and adopted in time. U
Kan Zaw, the Minister of National Planning and Economic
Development, recently stated 50% - 60% of the needed reforms were
complete but that much more needed to be done.
countries will refrain from imposing any performance requirements or

production quotas on any investors from another member state.
There are several key issues that will need to be addressed for
Myanmar to be compliant with ACIA. Prominent examples of these
issues include the 2012 Foreign Exchange Management Law (FEML),
which mandates that foreign investors receive approval from the
Central Bank of Myanmar prior to making capital account remittances
abroad (e.g. the payment of a dividend). Meanwhile, ACIA calls for
the free flow of capital in and out of Myanmar to other ASEAN
member countries.
Notification No 11/2013 issued by the Ministry of National Planning
and Economic Development (the FIL Rules) pursuant to authority
granted under the FIL prescribes certain areas in which foreign
investment is not permitted. Schedule 4 to the FIL Rules provides that
a number of fishing activities are reserved to Myanmar citizens,
whereas ACIA lists this as a sector where cross-border investment is to
be liberalised. Similarly small scale mining activities are currently
reserved for Myanmar citizens despite the ACIA goal of liberalising
mining investments for all ASEAN member states.
Reforming incongruous laws is a monumental challenge, one the
Government has said it will achieve and does appear to be focused
on. In the end the Government may also choose to exempt investors
from ASEAN member countries from such incongruous laws.
Regardless of the final outcome, much work lies ahead while AEC
Blueprint deadline looms.
33
Legal regime of ASEAN

Chandler & Thong-ek Law Offices
Overview for business lawyers: Myanmar and Thailand
This paper discusses some of the challenges for foreigners to do
business in the private sector in ASEAN member countries, in the context
of Foreign Direct Investment (FDI) in Myanmar and Thailand. Myanmar
and Thailand will not meet 2015 and other deadlines for full
implementation of AEC, but regional integration will continue. The AEC
is playing a major role in continuing integration of ASEAN and other
Pacific economies.
ASEAN Integration will help break down some of the remaining barriers
to entry, but both countries already present greater opportunities for FDI
than certain ASEAN agreements appear to contemplate. In fact, there is
a disconnect between schedules of restrictions under ASEAN Framework
on Services and ASEAN Comprehensive Investment Agreement, and
policy and legal regimes on the ground. It is important that business
lawyers see this difference.
The distinct character of each ASEAN member needs to be understood,
in order to see and realise opportunities for FDI. We often refer to the
cross cultural differences which give rise to some of the challenges:
The English, French, Dutch and Spanish left different footprints on
legal systems in different member countries. All ASEAN member
countries have some colonial history, with the exception of Thailand.
34
Different languages, religions, levels of education, upward mobility,

and wealth gaps.
Economic development gap between founding members and
Cambodia, Myanmar, Lao PDR and Vietnam (CLMV).
Different levels of isolation. Why the distance between most
Myanmar and Thai; could it be the 38 wars over four centuries, still
reflected in primary school textbooks?
The Core Elements or idealistic objectives of ASEAN Integration are:
1. Free flow of goods
2. Free flow of services
3. Free flow of investment
4. Free flow of capital
5. Free flow of skilled labour
Principal ASEAN Agreements
The key legal agreements (among others) include:
1. ASEAN Trade in Goods Agreement (ATIGA). Governs the ASEAN
Free Trade Area for intra-ASEAN trade in goods (effective May 2010).
Thailand has cancelled all import tariffs for goods originating in ASEAN
since 2010. However, non-tariff barriers remain. Other ASEAN countries
are expected to cancel import tariffs in 2015.
2. ASEAN Framework Agreement on Services (AFAS). Governs intraASEAN trade in services (effective September 1998). Each member
country has a schedule of specific commitments (horizontal
commitments and service sector commitments) in respect of opening
up service sectors, currently known as the 8th Package adopted in 2012.
Financial services liberalisation has been postponed until 2020.
Myanmars schedules include references to the Foreign Investment Law
1988, which has been superseded by the Foreign Investment Law 2012,
Foreign Investment Rules 2013, Myanmar Special Economic Zone Law
2014 (MSEZL) and Myanmar Investment Commission (MIC), which
recently issued MIC notification nos. 49 and 50/2014 which are proving
successful in attracting new services businesses.
Thailands schedules mention (under horizontal commitments) allowing
51% and 70% foreign ownership in some sectors, provisions not found
in existing Thai law.
5 priority integration service sectors, increase in equity participation:
51% by 2008, 70% by 2010 and logistics 51% by 2010 and 70%
by 2013.
All services across national borders in ASEAN: 70% foreign equity
participation by 2015.
makes decisions on approved investments. ASEAN members each have

a schedule of investment reservations in the Schedule of ACIA.
Flow of skilled labour: starting with architectural services, accountancy

services, surveying, medical and dental practitioners.
Myanmars reservations. 11 sectors are listed as restricted to foreigners.

The FIL 1988 is frequently cited as legislative grounds, but it was
repealed by FIL 2012 and FIR 2013, and some restrictions were relaxed
in MIC notification nos. 49 and 50/2014.
3. ASEAN Comprehensive Investment Agreement (ACIA). Governs

intra-ASEAN investment (effective April 2012). Liberalization of the
following sections is contemplated: manufacturing, agriculture, fishery,
forestry, mining and quarrying, services incidental to the above, and
other sectors to be mutually agreed. There are a number of sectors of
the economy which do not fall within these six sectors. There are
uncertainties as to which Government regulator in each ASEAN member
Thailands reservations. 25 sectors are listed as restricted to foreigners.

The Foreign Business Operation Act (FBOA) was cited as grounds for
restrictions in 17 sectors. The Working of Aliens Act applies to all sectors
and expressly prohibits 19 occupations to foreigners. There are some
proposed amendments to the FBOA being proposed to the Government,
but none are reported to be specifically ASEAN related. To our
knowledge, no amendment to the work permit rules is being proposed.
35
In August 2014, ASEAN Economic Ministers signed the Protocol to Amend

the ACIA, to allow ASEAN Member States to amend their respective
reservation lists in an expedient manner to better comply with the
commitments under the ACIA to promote the free flow of investment.
ASEAN member countries are on different time frames for compliance.
Myanmar is in group CLMV. Thailand is in group of six.
In August 2014, there were a number of meetings in NPT, 12th AEC
Council Meeting, 46th ASEAN Economic Ministers Meeting and related
meetings. There were a number of key outcomes to promote
cooperation among ASEAN members, e.g.
ASEAN Public Private Partnership (PPP) Framework.
ASEAN Qualification Referencing Framework (AQRF).
Elements Paper for the Upgrade of ACFTA.
Vision of AEC after 2015 (Post 2015 Vision).
Regional Comprehensive Economic Partnership (RCEP), ASEAN jointly
with India, China, Korea, Japan, Australia and New Zealand.
ASEAN-Republic of Korea Free Trade Framework.
The US-ASEAN Business Council brought a focus on training and
offering policy recommendations to support SMEs in ASEAN. SMEs
account for more than 96% of all enterprises, and for between 50 to
95% of all employment in many ASEAN members states. See report
released in August 2014, Beyond AEC 2015 Policy Recommendations
for ASEAN SME Competitiveness, that provides recommendations
for creating an improved environment for small business development
in ASEAN.
Specific restrictions on foreign investment in Myanmar and Thailand
Foreign investment legislation. Each ASEAN member country has
certain laws to provide incentives for legislation in specific sectors,
including tax incentives, guarantees, and relaxation on ceilings on
foreign ownership.
Myanmar: Myanmar has its Foreign Investment Law 2012, Citizens
Investment Law 2013, and Myanmar SEZ Law 2014. The first two laws are
administered by the Myanmar Investment Commission, which has
36
granted promotion to a number of foreign investors. There are a number

of draft laws and notifications under consideration, some with the
support of the International Monetary Fund (IMF), the International
Finance Corporation (IFC), Asia Development Bank (ADB) and other
international organisations.
Thailand: Investment Promotion Act provides for promotion of both
domestic and foreign investment, and is well administered by the Board
of Investment (BOI). The BOI recently adopted a policy to promote
outbound investment (not limited to ASEAN members), but its success
will depend upon restrictions on Thai FDI in each target ASEAN member.
Ceilings on foreign ownership of businesses
Myanmar: The State-Owned Enterprise Act (1989) provided that 12
activities could only be undertaken by a State-owned economic
enterprise. Foreign Investment Rules and MIC notification 1/2013 provided
details on terms and restrictions on making certain kinds of foreign
investments. In August 2014, new MIC notifications nos. 49/2014 and
50/2014 were enacted, relaxing certain restrictions on foreign ownership.
Thailand: 17 laws and policies place ceilings on foreign ownership in
specific businesses. FBOA includes restrictions on 43 businesses. The
BOI may grant exemptions from restrictions in a number of categories of
business. Under the AFAS, foreigners from other ASEAN members are
allowed to hold majority shares in a number of service businesses, but
no amendment to the FBOA has been proposed to allow this.
Work permits and visas. Under the AEC Blueprint regarding free flow
of skilled labour, ASEAN countries have signed a Mutual Recognition
Arrangement for eight occupations to work in other ASEAN countries.
Myanmar: Myanmar is the language of the courts. Currently there is no
work permit law; foreigners who work in Myanmar enter on a variety of
visas. There are references to stay permits but few foreigners obtain one.
Thailand: Working of Aliens Act, requires foreigners to obtain work
permits to work (broadly defined) in Thailand. It bars work permits for
foreigners in 19 occupations. Under the AFAS and ACIA, foreigners from
other ASEAN members should be allowed to work in Thailand, but no
amendment to the law has been proposed to facilitate this.
Bilateral Investment Agreements

Myanmar has BITs with four ASEAN countries: Lao PDR, Philippines,
Thailand, and Vietnam
Thailand: Thai is the language of the courts. However, most contracts

may be signed in English or other foreign language, with Thai
translation only required if introduced as evidence in a court.
Thailand has BITs with six ASEAN countries: Cambodia, Indonesia,

Lao PDR, Myanmar, Philippines, and Vietnam
Governing law
Myanmar: Myanmar law is the common choice of governing law,
especially with state contracts. Myanmar courts will not accept
jurisdiction over a contract governed by foreign law, but will consider
a foreign court judgment.
Thailand: Generally, parties to the contact may select the governing
law. In a Thai court, the foreign law must be proven as matter of fact.
A Thai court will not enforce a foreign judgment.
Dispute settlement
Myanmar: The Arbitration Act 1944 is currently in force, and does not
recognise foreign arbitration awards. Myanmar acceded to the NY
Convention in 2013, and a draft new arbitration law (based on the
UNCITRAL Model Law) is under review. Upon enactment, both
foreign and domestic arbitration awards would be enforceable by
Myanmar courts.
Thailand: the Arbitration Act provides for enforcement of both
domestic and foreign arbitration awards. However, the Thai
Government has a policy against using arbitration for dispute
settlement in state contracts.
Language of contracts
Myanmar: In practice, contracts are signed in Myanmar or English. A
Myanmar translation is required if introduced as evidence in a court.
Double tax treaties

Myanmar has DTTs with five ASEAN countries: Lao PDR, Malaysia,
Singapore, Thailand, and Vietnam
Thailand has DTTs with seven ASEAN countries: all except Brunei
Darussalam and Cambodia
Specific sector initiatives
Businesses in Thailand have taken initiatives to support the Thai
Government in achieving its AEC commitments, including the
automotive industry, Thai Bankers Association, etc. Certain Thai
regulators have also taken initiatives, including the Bank of Thailand
and Board of Investment.
Other regional economic developments
There are a number of free trade initiatives which include ASEAN:
ASEAN + 3
Free-trade agreement negotiation framework between ASEAN
and China
Regional Comprehensive Economic Partnership (RCEP), 16 countries
Trans-Pacific Partnership (TPP), 12 countries
A new website set up in July 2014 to list laws of 10 ASEAN countries: http://asean-law.senate.go.th/
ASEAN: http://www.asean.org/
US-ASEAN BUSINESS COUNCIL: www.usasean.org
Thailand Board of Investment: http://www.boi.go.th/
The AEC 2015 and Thailands Scorecard, 17 June 2014, Cynthia Pornavalai, Tilleke & Gibbins: http://www.tilleke.com/
A Looming Challenge: Myanmar obligated to comply with ACIA by 2014, April 2014, William Greenlee and Huy Luu, DFDL: www.dfdl.com
ASEAN Economic Community 2014: Potential, Reality and Getting Involved, 26 August 2014, Vriens & Partners: http://www.vrienspartners.com/
Beyond AEC 2015 Policy Recommendations for ASEAN SME Competitiveness, August 2014, https://www.usasean.org/regions/asean/resources
37
Global Leader in Risk

Mitigation and Response.
GLOBAL PERSPECTIVE. REGIONAL INSIGHT INTO ASEAN.
Kroll is the leading global provider of risk solutions. For over 40 years, Kroll has helped clients make
confident risk management decisions about people, assets, operations, and security through a wide
range of investigations, due diligence and compliance, cyber security, physical and operational security,
and data and information management services. Headquartered in New York with more than 55 offices
across 26 countries, Kroll has a multidisciplinary team of nearly 2,300 employees and serves a global
clientele of law firms, financial institutions, corporations, non-profit institutions, government agencies,
and individuals. Our services include:
INVESTIGATIONS
Litigation and dispute advisory
Fraud and internal investigations
Anti-bribery and corruption
Misuse of intellectual property
Regulatory investigations
PHYSICAL SECURITY
Security design
and engineering
Crisis management
Travel risk assessment
CYBER SECURITY
Information risk assessment
Data breach and incident
response
Computer forensics
COMPLIANCE AND BUSINESS INTELLIGENCE

Supplier diversity
Third party and vendor screening
Screening and red flag identification
Anti-money laundering (AML)

Know-your-customer (KYC)
Market entry analysis
Competitor intelligence
Commercial due diligence
Investigative due diligence
Contact Kroll for more information:

[email protected] | ASEAN: +65 6645.4520
kroll.com
2014 Kroll. All Rights Reserved.
Challenges for investors

to and from frontier markets
Richard Dailly, Managing Director, Southeast Asia, Kroll
CASE STUDY: KROLL ASSOCIATES
Richard Dailly
The most recent stages of globalisation are making

many of the traditional investment flow models
obsolete. Frontier markets, such as Myanmar, Papua
New Guinea and Lao PDR can be problematic for
foreign investors, albeit in different ways. They present
an interesting level playing field both for foreign
investors, who may not understand the Region, and
local corporates vying to attract professional, well
managed, and high quality investment.
For example, the changes which have taken place in
Myanmar in the last two years have been exceptional
and without precedent. Two years ago, Myanmar was
considered at best challenging, and at worst, off-limits to
many international investors. As of 2014, it is one of the
key investment destinations in Southeast Asia. If
projections are accurate, then within a relatively short
period, Myanmar with its many natural resources, its
geo-political importance, access to the Indian Ocean,
and large young population, is set to become a
significant economy in the Region.
Nonetheless, years of underinvestment and nontransparency, still leave potential investors with
significant challenges before entering into business
relationships in Myanmar. Most investors are reliant on
researching available regulatory and corporate
documentation, online information and the media as
part of their pre-investment due diligence process.
These checks are difficult, if not impossible in Myanmar.
Even apparently simple tasks, such as understanding
local naming conventions, can present real problems for
foreigners. A further problem is the language: unlike
Thai or Vietnamese, for instance, the Burmese language
script is often not supported by mainstream computer
software packages, so even reading Burmese text
becomes problematic. Further, the relatively young
media culture in the country often means that the only
voice to be heard in the international community, is that
of the NGO community, who are often closely allied
with the few independent media outlets which exist
and may even share staff. This has created its own
39
challenges, namely skewed and biased reporting. The repetition of

allegations online, then creates its own perception of truth: reports by
NGOs which may have been poorly researched, inaccurate and
misrepresentative of certain issues, become repeated and accepted as
the mainstream accepted wisdom.
So the challenges for investors into frontier markets such as Myanmar
are well known and manifold. Many of the same challenges are also
true of Papua New Guinea, Lao PDR and Cambodia.
CASE STUDY: KROLL ASSOCIATES
But what of the corporates from these countries, who are themselves
trying to attract investment? All too frequently, for the reasons spelled
out above, they feel that they have been misrepresented, and have
been treated unfairly in traditional and online media. They frequently
claim that the accepted wisdom is one-sided, inaccurate and wrong.
Corporates from frontier markets are looking to be treated fairly on a
level playing field.
40
Kroll can have a role to play in these situations. As an independent

company, with a forty year reputation for fairness and accuracy, Kroll
has a role in explaining to investors, bankers and regulators, the
context behind the often sensationalised stories that develop in
markets like Myanmar. Kroll has the experience in helping outsiders
who are unfamiliar with a region, remove the filter of distorted
reporting, and to help institutions, investors and regulators look upon
frontier markets in a more balanced way, taking into consideration
history and culture.
Further, many corporates from these frontier countries are themselves

unable to distinguish between the genuine investors from developed
markets, and charlatans. Kroll is increasingly witnessing scenarios
which reverse the traditional due diligence model. Kroll has found that
the emerging markets corporates, who are themselves the usual
subject of such investigations, are requesting Krolls services to
undertake vetting, background checking and enhanced due diligence
on foreign investors. With Krolls global network, it is straightforward
for Kroll to undertake research in the developed markets on behalf of
local companies.
Kroll has always maintained that risk works both ways. There is
certainly risk to a foreign investor looking to expand into frontier
markets, but there is also a risk to businesses in frontier markets
attracting the attention of investors.
Immigration in ASEAN: Planning for

the challenges
Christina Karl, Managing Director, Berry Appleman & Leiden Asia Pacific Pte Ltd
Christina Karl
The ASEAN countries have made great efforts in recent

years to attract foreign investors to continue the
economic growth of the Region. Immigration
regulations and procedures remain some of the biggest
challenges facing foreign companies who are looking to
expand their operations into ASEAN. The immigration
processes in the majority of ASEAN countries, Singapore
being one notable exception, are for the most part
complicated and lengthy. Companies looking to open
branch offices or send employees to support customer
contracts must be aware of the timing and requirements
in each country in order to plan business goals and
projects effectively:
Sponsor Issues - Every ASEAN country requires that a
the sponsor company of a foreign nationals work
42
permit be registered to conduct business with the

appropriate Government Agency. This means that in
order for a foreign company to send its executives or
specialists to work in an ASEAN country, it must either
make a substantial capital investment or find a customer
company willing to bear the obligations related to
sponsoring its assignee. While many countries allow the
foreign assignees payroll to be kept in the home
country, the local company work permit sponsor still
faces potential liability under the respective countrys
foreign employment laws. This can strain delicate
business relationships and foreign companies that are
not willing or able to invest the resources necessary to
start a branch office or subsidiary, can have great
difficulty finding a local company willing to sponsor their
Complexity of Process: Documents - The immigration processes in

most ASEAN countries are document intensive. Examples of the
requirements in the more document intensive countries include, tax
and insurance documentation, local company organisation charts,
training plans for local employees and images of local office or factory
sites, in addition to the usual business registration documents.
Document requirements for the assignee must also be considered
with some countries requiring police clearances or verification of
education certificates which can takes weeks to obtain.
Complexity of Process: Number of Steps - The levels of Government
approvals required in order to obtain a work permit for can also add
to the complexity of the process. For example, several countries
require that approval be obtained for the foreign nationals proposed
position - either by the local labour authority or industry ministry or
both, depending on the nature of the position and the industry of the
sponsoring company. This step is usually one of the requirements,
even before the foreign national can apply for the entry visa. Levels of
complexity are also added depending on:
whether the work permit or visa also allows the foreign national to
stay in the country, or if a separate residence permit is required
whether a separate re-entry permit is required
if there are separate in-country registration requirements with local
police or immigration or tax authorities
Length of Process - Processing times for a work permit in most ASEAN
countries falls between two to four months. Only in Singapore can a
company expect to have a chance to obtain work authorisation for its
foreign assignee in less than 30 days, although the new job
advertisement requirement that was recently implemented, may add
to that time. The Philippines and Indonesia have some of the longest
processing times with a minimum of three to four months before a

foreign national can complete their work authorisation process.
Depending on the complexities of the case, work authorisation in
Indonesia, in particular, can take up to six months. Timing concerns
include when during the immigration process the foreign national is
legally allowed to start work. In most cases, the foreign national must
complete in-country processes and physically hold their work and/or
residence permit before they can legally start work. This can mean
delays in-country of a few days to a few weeks depending on the
authorities and processes involved.
assignees work permits. This leaves many foreign companies

struggling to find a compliant way to meet customer contract and
other business obligations.
The ASEAN countries have responded to the changing business needs

of global companies by updating their immigration regulations to try
and attract the most desirable, educated and experienced expatriate
workers. Vietnam, for example, has continued to revise its immigration
regulations to clearly define categories of work permits available to
foreign executives and specialists. Even with the changes, however,
most ASEAN countries are still struggling to find the balance between
keeping the door open for the educated and experienced foreign
workers needed by the foreign branch offices and investor projects,
maintaining opportunities for their own skilled workers and enforcing
immigration regulations to prevent overstays and misuse of visas.
Finding the balance point for these important immigration concerns
will definitely be a crucial part of the continued economic growth of
ASEAN countries.
About Berry Appleman & Leiden
Founded in 1980, Berry Appleman & Leiden provides comprehensive
global immigration services from offices in Singapore, Shanghai,
Geneva, London, Rio de Janeiro, So Paulo, Sydney and the United
States. BAL manages global visa matters and customised application
approaches for work permits, business visas, and residence permits in
more than 100 countries. BAL offers centralised management with
regional and local support for the complete spectrum of global
immigration matters. www.balglobal.com
43
SICPA
A GOVERNMENT
SECURIT Y SOLUTIO
ONS
Every day, governments, companies and millions
m
of
people rely on us to protect the integrity a
and value
of their currency, personal identity, prod
ducts and
brands. Contributing to the development o
of a world
more secure for the citizens is SICPA
As business
purp ose; we enable governments to prote ct tax
revenues and deliver associated policy o
objectives
by providing unique and secure authentic
cation and
traceability solutions.
Enab
bling trust
www.sicpa.com
Building national capabilities and facilitating

trade through secure regional supply chains
Philippe Amon, Chairman & CEO, SICPA
2015 and the implementation of the ASEAN Economic Community is just
around the corner. It represents a great opportunity for Member States
but also a challenge. It puts a spotlight on trade in the Region and the
importance of ensuring improved transparency and predictability of the
trade supply chain.
CASE STUDY: SICPA
Fraud and illicit trade in all their forms remain a complex and serious
threat to well-being in the ASEAN Region. They reduce Government
revenues, weaken the rule of law and the impact of Government
policies, damage the interests of manufacturers and consumers alike and
put at risk public health. Fraud and illicit activity undermine confidence
in the safe international trade which is essential for the economic growth
and development of the Region. It seems, in an ever more connected
world, that the magnitude of the threat can only grow as the everexpanding array of illicit actors and networks converge.
But there is much that can be done, this largely asymmetric threat
demands a concerted response through enhanced cooperation and
sharing of best practice. Improving national capabilities through taking
advantage of the latest technology, offers an important way forward.
Crucially, robust national systems can be linked across borders to build
an interoperable regional network, indeed it is important that they are
designed with this objective in mind.
Making high risk low risk

SICPA is at the forefront of those in the private sector investing in
developing up-to-date tools for governments, so they can meet these
challenges now and in the future. We are aligned with initiatives to
facilitate trade being promoted by international organisations such as the
World Trade Organisation (WTO) and World Customs Organisation
(WCO). We believe we have much to offer to support approaches based
on Authorised Economic Operators (AEO). In particular our secure
technologies based on the SICPATRACE platform provide the means
for otherwise high risk goods (be they excisable products such as
tobacco and alcohol, medicines, sensitive spare parts or strategic
controlled goods etc.) to be treated similarly to lower risk products, but
without compromising on security. This accelerates cross-border
movements thus promoting legitimate trade and is a win-win-win for
governments, manufacturers and consumers.
Our approach builds on our long experience in providing security inks
and security features to protect banknotes and in working in partnership
with governments. SICPA has developed a modern tool box which can
be implemented in a modular way, interoperable by design but also
adapted to take account of national needs. At the core of the approach
is secure track and trace which provides transparency and control for
45
governments across the length of complex supply chains, which

criminals are so adept at exploiting.
Digital technology is crucial but needs to be complemented by
material based security
Secure track and trace is based on marking legitimate products
securely, so as to guarantee authenticity and gives each item a unique
identity, so that it can be monitored through its life cycle from
manufacturer to consumer. Digital technology is essential for
monitoring and for the full exploitation of data, but to protect against
the vulnerabilities of cyberspace, secure marking needs to use material
based features such as high security inks.
CASE STUDY: SICPA
At every stage of the supply chain control programme based on this

technology there are benefits. At the beginning, they include
production control which tackles the mis- or under-declaration which
result in tax losses. There are further tax and public health related gains
from preventing diversion frauds, adulteration and illicit activities such
as repackaging. At inspection stages there are tools to counter
corruption. Business intelligence, risk profiling and reporting modules
exploiting Big data ensure best use of enforcement resource. Realtime information of evidential quality improves enforcers hit rates for
seizures and prosecutions. At the border reliable data allows for
efficient and swift processing and information exchange.
46
Implementation requires a holistic approach and expertise

SICPA knows from its experiences across the globe that implementing
a successful track and trace system requires a holistic approach and
proven expertise. It needs to address the needs of all stakeholders.
Permissive legislation needs to be in place. A good system is nonintrusive and has minimal impact on production processes - it copes
with difficult industrial environments. The integrity of data capture is
crucial it has to be error free and acceptable to all supply chain
actors. It requires a fully reliable and secured system of aggregation so

that e.g. a bulk package does not require unpacking when it is
inspected. Checks by the authorities need to be quick and easy,
compatible with trade facilitation schemes based on AEO and contain
anti-corruption safeguards.
The cost of illicit trade is high. The benefits of combating it are
significant. The technology now exists to do so successfully. It is a tool
par excellence of good governance. We stand ready to support
governments in ASEAN to make it happen!
SICPA Government Security Solutions
Tel: +65 66 929 898 | Fax: +65 66 929 899
Email: [email protected] | Web: www.sicpa.com
ENERGY
Further investment needed

to develop oil & gas resources
Southeast Asias fast expanding economies and growing populations
mean a rising consumption of energy resources, especially oil & gas.
Indonesia, the largest ASEAN oil producer with 918,000 barrels per day
(bpd) in 2012, was once a leading member of OPEC, but became a net
importer of crude oil in 2004.
However, in some countries oil & gas revenues are still the bulwark of
their economies, notably in Brunei Darussalam where hydrocarbon
exports account for 85% of the Sultanates GDP.
Southeast Asias proven reserves of oil, representing what is currently
economic to produce, amount to 13 billion barrels, which at present
levels of production would sustain output for the next 14 years.
As a result, the International Energy Agency (IEA) says that Southeast
Asia could become the worlds fourth largest oil importer by 2035. The
IEA suggests that a decline in mature fields and limited new projects
could lead oil production across the Region to fall by almost one third in
this period.
The situation varies across the Region though. Brunei Darussalam and
Malaysia are net exporters of oil. Malaysia is ASEANs second largest oil
producer with an output of 670,000 bpd in 2012. Nevertheless while
ASEANs existing oilfields are being depleted, there remain relatively
large and unexplored areas thought to hold considerable resources,
particularly in deep waters offshore. (BP Statistical Review of World
Energy 2014)
At the end of 2012, Malaysias proven oil reserves were four billion
barrels. These are located mainly offshore of Peninsular Malaysia,
Sarawak and Sabah.
Vietnams focus is also offshore to secure oil supplies for a growing
domestic market and to limit imports. The country has proven reserves
of 4.4 billion barrels. Oil production was 360,000 bpd in 2012, though its
largest fields at Bach Ho, Rong and Rong Se are in decline. The most
promising areas for exploration are the Cuu Long, Nam Con Son and the
Malay basin, offshore in southern Vietnam.
While not an oil producer, Singapore is very active downstream in oil
trading and refining. Its refinery industry accounts for 5% of GDP and
produces 1.3 million bpd of products, well above domestic needs. This
leaves large quantities of gasoline and fuel oil to be sold elsewhere in
the Region, particularly to Malaysia, China and Australia.
Energy security and future oil supplies is a priority for countries in the
Region, however, the outlook in the respect of gas is more optimistic.
ASEANs proven gas reserves at the beginning of 2013, mostly located in
Indonesia and Malaysia, were around 7.5 trillion cubic metres (tcm),
representing 3.5% of total world reserves.
Indonesias gas production has been increasing, reaching 81 billion cubic
metres (bcm) in 2011. There is substantial scope to develop production
further. Its proven gas reserves are just over three tcm, with the
countrys largest production areas located in Sumatra and East
47
prospects are thought to hinge on exploration in the deep waters of the

Baram Delta. Most of the Sultanates gas production feeds the Brunei
Liquefied Natural Gas (LNG) liquefaction plant, from where it exports to
Japan and Korea under long term contracts.
Malaysia, with proven reserves of 2.4 tcm, has an annual production of
56 bcm, the second largest in ASEAN. Production from offshore
Peninsula Malaysia, including the Thailand-Malaysia Joint Development
Area, is helping to meet rapidly increasing demand from domestic users.
Kalimantan. The largest undeveloped prospect is in the offshore East
Natura block, which holds about 1.3 tcm of reserves.
Myanmars current production comes from fields in the Andaman Sea,
which mainly supplies Thailand. Production is also increasing at the
offshore Shwe field in the same area.
The latter is the primary source of gas, feeding the Myanmar-China
pipeline commissioned in 2013. The pipeline has a capacity to transfer
12 bcm a year under a 30 year agreement. However, as Myanmar
develops it is likely that more of its gas will be needed by domestic
industries and for generating electricity.
Brunei Darussalams gas output has been sustained at 12-13 bcm a year.
Southwest Ampa is its largest gas producing field, though future
48
Gas production in Vietnam has grown steadily over the last ten years,
reaching nine bcm a year. The Lan Tay field in the Nam Con Son basin,
provides almost two thirds of the countrys total output. New
developments in the latter are projected to boost Vietnams total output
in the short term. Prospects are also promising in the largely unexplored
Song Hon basin and other areas in the South China Sea. (IEA)
Thailands gas and its oil deposits are located mostly offshore in the Gulf
of Thailand. Production at 28 bcm a year has increased in recent years,
as new output has come on-stream from the Joint Development Area
shared with Malaysia.
The Regions gas resources could also receive a major boost from
unconventional sources. A study into exploiting shale gas deposits in
ENERGY
The Region had almost 90 bcm annual LNG

liquefaction capacity in 2013; accounting for a quarter
of the worlds total, with production principally located
in Indonesia, Malaysia, and Brunei Darussalam.
North Sumatra has been made by five companies and around 70
proposals to drill exploration wells have been submitted for approval,
the IEA says. There are expectations that commercial shale gas
production could begin in 2018. Exploration activity is also underway
for methane recovery from coalfields in Indonesia.
However, the costs of developing energy resources in the Region are
prodigious. According to the IEA around US$205 billion is needed for
oil supply infrastructure, mainly for upstream development and for
new refineries. Gas requires the larger sum of US$460 billion,
reflecting the increasingly high costs of development and the need for
expanded transmission and distribution infrastructure.
ASEAN could become hub for global LNG trade
Southeast Asia is one of the worlds main suppliers of LNG. This
product, which has been reduced to one 600th of its original volume,
through a liquefaction conversion process at cryogenic temperatures
into liquid form, is ideally suited for shipment over long distances
where no pipelines exist.
The Region had almost 90 bcm annual LNG liquefaction capacity in
2013; accounting for a quarter of the worlds total, with production
principally located in Indonesia, Malaysia, and Brunei Darussalam.
Malaysia ranks as the worlds second largest LNG exporter after Qatar,
supplying Japan, South Korea and China as its main customers.
Production from offshore Sarawak, feeds an LNG liquefaction terminal

with eight processing units at Bintulu.
Brunei Darussalam was the first country in ASEAN to export LNG
starting in 1972, and is still an important exporter. Malaysia and
Indonesia were also early pioneers and are important global exporters.
Indonesia is a significant exporter of LNG to Japan, South Korea and
China. The countrys three LNG liquefaction plants at Botang, Arun
and Tangguh, have a combined capacity of 45 bcm a year. In 2012,
Indonesia ranked as the worlds fifth largest LNG exporter. Two more
liquefaction plants are also being built on the island of Sulawesi at
Sengkang and Donggi-Senoro.
Promising areas of development include West Papua and Sulawesi.
The prospect of Floating LNG (FLNG) facilities are increasingly seen as
the way to open up offshore locations in remote areas, such as the
Arafura Sea in East Indonesia where an FLNG project is planned.
The region has immense untapped natural gas resources, much
of which is located in deep-water offshore areas and a long way
from centres of demand. While the prospects are challenging,
investment in natural gas development is set to grow substantially
for years to come. Anticipating this, Singapore and Malaysia have
plans to become hubs for both regional and global LNG trade in
the future.
49
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ENERGY
ASEAN Oil & Gas: Turning a vision into reality
CASE STUDY: KRIS ENERGY
Established in September 2009, by a management team with decades of

experience and a proven track record, KrisEnergy Ltd. was borne from a
vision to build a sustainable and best-in-class upstream oil & gas
company, solely focused on high-potential geological basins in
Southeast Asia.
Five years on, KrisEnergys portfolio comprises 19 contract areas1 across
various stages of exploration, appraisal, development and production, in
five countries Bangladesh, Cambodia, Indonesia, Thailand and
Vietnam and a net production of approximately 8,000 barrels of oil
equivalent per day (boepd). We became a publicly listed company in
Singapore in July 2013 with a market capitalisation of over US$1 billion.
These early days mark only the beginning of KrisEnergys evolution. New
oil & gas projects coming on stream from 2015 onwards, will increase
production and reserves, and a raft of exploration wells in the
coming years have the potential to be transformational. Business

development activities run in parallel with operations and provide
organic growth, as well as multimillion dollar mergers & acquisition
(M&A) opportunities.
Tried and tested
The upstream industry carries inherent risks at each stage of a projects
lifecycle whether it is exploration drilling, development execution,
reservoir performance or equipment and services availability, among
others. Key to building an exploration and production (E&P) company is
the continuous mitigation of such risks.
Our strategy begins with a regional focus, where we have extensive
technical knowledge through our highly experienced technical team.
KrisEnergys interest area stretches from the Surma Basin in Bangladesh
in the west to the Papuan Basin in the east, and from offshore southern
51
Portfolio building across the E&P lifecycle

DISCOVERY REQUIRING
APPRAISAL
EXPLORATION
DEVELOPMENT PENDING
G10/48
(Niramai)
Block A
(Platform A)
Block 9
(Bangora)
SS-11
Sakti
East Muriah
G6/481
G6/48
(Rossukon)
G11/48
(Manatana)
G10/48
(Mayura)
Kutai
Block 9
Block 9
(Lalmai)
Bulu
G10/48
Block A
Aceh1
Bulu
(Lengo)
G11/48
(Nong Yao)
East Muriah
(East Lengo)
Kutai
Tanjung Aru
Block A Aceh1
Block 105
G11/48
B9A
Block A
(Platform B&C)
Block 115/09
B8/32
G10/48
(Wassana)
G11/48
(Angun)
Block A Aceh1
PRODUCTION & NEAR

PRODUCTION
Udan Emas
Block A
Block 120
East Seruway
Tanjung Aru
JSAs
LEAST MATURE ASSETS
Oil
52
Gas
*Oil & Gas
MOST MATURE ASSETS

*Drop size is not indicative of reserve/resource potential
China in the north to Indonesia in the south. Although this vast area
spans numerous national boundaries, the geology is similar across much
of the map, with the exception of the far eastern flank.
This business model was tried and tested previously in Pearl Energy, an
upstream oil & gas company established in 2002 by the same KrisEnergy
management and acquired by a Middle East entity in 2008.
Our positioning in multiple countries spreads our exposure to different

political and fiscal regimes and regulatory frameworks. We maintain a
rigorous and disciplined selection process in our assessment of potential
asset targets, whether it is via direct government award or through
acquisition, and we aim for a balance between oil & gas, the latter being
under long term supply contracts in Asia and more stable in pricing than
volatile spot oil markets.
Continuous pipeline
Our operations include all facets of the E&P lifecycle from identifying
leads and prospects to discovery and commercialisation. Our offices in
Bangkok in Thailand, Dhaka in Bangladesh, Ho Chi Minh City in Vietnam,
Jakarta in Indonesia, Phnom Penh in Cambodia2 and Singapore,
undertake technical work in-house and liaise with the host governments,
regulatory authorities and local communities.
DISCOVERING
HIDDEN
VALUE
SINCE
2009
BANGLADESH
Dh a ka
VIE T N AM
T H A ILA ND
THAILAND
B an g k o k
KrisEnergy
Bangkok
CA M BO D I A
CAM BO D IA
2009
Phnom Penh
Ho Chi
Minh City
500km
0
0
S i ng a p o r e
500m
Exploration
S u m at r a
KrisEnergy regional office
Singapore
Kalimantan
500km
500m
Sumatra
Papua
Production and near production

Development pending
IN D O N E S IA
Jakarta
Discovery requiring appraisal

Exploration
Java
KrisEnergy regional office
A leading Asian upstream oil and gas company, KrisEnergys

portfolio strategy aims to spread opportunities and risks across
multiple prospects, basins and countries as well as across
the upstream lifecycle from exploration and appraisal to
development and production.
www.krisenergy.com
From 2015 until early 2018, our production is set to

rise steadily, as our existing development projects
come on stream.
Our producing assets provide cash flow with which we appraise and
develop our discoveries. We continually add exploration blocks, both
moderate and high risk, to the portfolio and once we are successful,
the asset moves into the appraisal stage and subsequently into
development. This pipeline of independent projects, provides a
continuous flow of opportunities to grow our reserves and resources
and increases oil & gas production and cash flow. Where possible, we
prefer to operate licences, thereby overseeing work programmes and
associated budgets. KrisEnergy operates 122 of the 19 assets.
54
Our 8,000 boepd of net production derives from two licences in the
Gulf of Thailand and one onshore gas field in Bangladesh. This
production provides annual revenues of US$75-90 million,
depending on oil & gas prices, which translates into a yearly EBITDAX
of US$30-40 million. EBITDAX, or earnings before income tax,
depreciation, amortisation and exploration expense, is used as an
indicator of free cash flow for E&P companies.
From 2015 until early 2018, our production is set to rise steadily, as our
existing development projects come on stream. Oil is anticipated to
flow from the Nong Yao field in G11/48 in the Gulf of Thailand in mid
1
2
2015 followed by the Wassana oil field in the neighbouring G10/48

block in the second half of the year. These fields will have a peak
production capacity of 15,000 bpd and 10,000 bpd respectively.
Thereafter we anticipate gas development projects, in four production
sharing contracts (PSC) in Indonesia. Gas has become an increasingly
important resource in Southeast Asia in the last 15 years supported by
development of the regional pipeline infrastructure and industrial
growth. Our gas projects are within the Bulu and adjacent East Muriah
PSCs offshore East Java, Kutai PSC offshore East Kalimantan, as well as
the Block A Aceh PSC1 onshore Sumatra.
Plans are also afoot to develop two further oil fields: the Rossukon
discovery in G6/48 in the Gulf of Thailand for which we will undertake
an appraisal drilling campaign in 2015; and the Apsara area in Block A
offshore Cambodia, which will be the first commercial oil production
for the Royal Kingdom of Cambodia.
As KrisEnergy approaches its sixth year of operations, we believe we
have the building blocks to deliver a business of real scale in the heart
of energy-hungry Asia, where the economic outlook is for robust
medium-term growth.
KrisEnergys acquisition of a 41.67% working interest in Block A Aceh is pending government approvals.
Transfer of operatorship for Cambodia Block A is pending government acknowledgement.
INDUSTRY & MANUFACTURING
Manufacturing moves up the value added chain

Southeast Asias manufacturing industry plays a significant role in
international trade and is a major contributor to the ASEAN economies.
In Indonesia, Thailand, Singapore, Philippines, Malaysia and Vietnam the
percentage of manufacturing to GDP is 20% and above, and in
Cambodia it is approaching this level.
Southeast Asia has experienced a strong Compound Annual Growth
Rate (CAGR) in terms of its manufacturing output over the last decade
and now accounts for almost 4% of global manufacturing output.
This growth has been funded by both domestic companies and
foreign investors.
There is now a growing emphasis on developing more value added
production, which means Southeast Asias role in global trade is likely to
remain significant, in spite of potential slowdowns in pivotal economies
such as China, the US and in the Eurozone.
Any concern about fragility in export markets, is balanced by

expectations of increased intra-ASEAN trade following the
implementation of the Regions Economic Community in 2015. Foreign
companies are showing that they share this confidence. ASEAN
surpassed China in terms of Foreign Direct Investment (FDI) inflow in
2013, with the manufacturing sector receiving a large amount of
the funds.
More than 30% of all FDI that was directed to ASEAN countries between
2005 and 2010, went into manufacturing ventures and analysts believe
this focus is likely to continue. (blog: frontiersstrategygroup.com)
Japan is one of the top investors in the Region, reflecting investments by
more than 6,000 of its companies valued at US$122 billion. Almost two
thirds of these investments are in Singapore, Malaysia and Thailand. A
report by Tokyo based NLI Research Institute says that more Small and
55
Medium Enterprises (SMEs) are moving into ASEAN countries,

particularly components and service firms.
There are a number of reasons why foreign manufacturing companies
are attracted to the Region and they do not all hinge on low labour costs.
Singapores Corporate Tax rate of 17%, for instance, is the lowest of any
ASEAN country.
However, there are other considerations. Singapore occupies seventh
place in a Global Innovation Index published by the UNs World
Intellectual Property Organisation in conjunction with Cornell University
and Institut Europeen dAdministration des Affaires (INSEAD).
At ninth place in a world rankings list of 38 countries, Singapore is also
the highest ranked ASEAN State in the 2013 Global Manufacturing
Competitiveness Index, published by Deloitte Touche Tohmatsu and the
US Council on Competitiveness.
The Deloitte Index measures, among other criteria, a countrys macroeconomic situation, financial and tax system, level of infrastructure,
supplier networks, as well as the degree of talent driven innovation.
The Index also places Thailand in 11th place, Malaysia in 13th while
Indonesia and Vietnam occupy 17th and 18th places respectively.
Looking five years, ahead Deloittes report forecasts that both these latter
countries will move further upwards in the Index to be ranked 11th and
10th respectively.
Malaysia is seeking to develop its economy through its Economic
Transformation Programme, which seeks to encourage innovation based
56
expansion, a route that is also favoured in Singapore as both countries

strive to move further along the value added production chain.
The manufacturing sector generates about 25% of Malaysias GDP with
output valued at US$69 billion in 2013, up 10.9% over 2012. The main
industries comprise electrical and electronic components including highend consumer electronic goods, photovoltaic cell modules and
Information Communication and Technology (ICT) products. These
areas of production make up 32.9% of Malaysias total exports, which
also include machinery, appliances, optical and scientific equipment,
chemical and petroleum products.
Malaysia was ranked as the worlds best manufacturing destination by
international property agent Cushman and Wakefield in its 2014
Manufacturing Index. Thailand was listed in fourth place and Indonesia
ranked eighth. The Index assesses countries in terms of labour and
building costs, availability of trained workers, corporate risks, logistics
Southeast Asias manufacturing industry plays a

significant role in international trade and is a major
contributor to the ASEAN economies.
and their business environment. Malaysia is also ranked highly in the
World Banks most recent Ease of Doing Business Report, having
jumped six places making the country the second highest ranked ASEAN
country after Singapore. Thailand came in at 18th place.
Manufacturing constituted 33% of Thailands GDP in 2013, the highest
percentage in Southeast Asia. Valued at US$120 billion, manufacturing
output included electronic goods, computers and ICT products,
components, garments, automobiles and motor cycles. The country has
been a manufacturing hub in the Region for US and Japanese
companies for more than 20 years.
One of the principal drivers of Thailands development as a
manufacturing hub has been the emergence of its motor vehicle
industry. A report by the Tokyo based NLI Research Institute says that five
ASEAN countries produced around 5.3 million cars in 2013.
Most of this production came from Thailand, which turned out 2.5
million units followed by Indonesia with 1.2 million cars and Malaysia
with 601,000.
With the highest level of automobile production in the Region, Thailand
is described as Asias Detroit. Output from European, US, Asian and
Thai companies covers all aspects of production from parts and

materials, manufacturing to final assembly. Other ASEAN countries are
also keen to focus on car, truck and motorcycle production.
Some 14 companies, including global giants such as GM and Ford, are
involved in car production and another seven companies produce motor
cycles. In total these companies and joint ventures, employ around
100,000 workers. An additional 250,000 people are employed by an
estimated 635 companies, in the auto parts supply chain and a further
175,000 are estimated to work in smaller scale manufacturing operations
serving the countrys car industry.
Despite political uncertainty, the countrys open market orientated
economy, continues to be attractive to outside investors. In an analysis
of emerging markets prospects in the next two years, Bloomberg
recently ranked Thailand as the fifth most promising market globally and
the second in Southeast Asia after Malaysia. The Philippines was placed
16th, while Indonesia was ranked 18th most promising. (Dezan Shira)
While Thailands manufacturing sector is concentrated around the capital
area of Bangkok, a number of development zones throughout the
country are being created to decentralise the sector. This process has
been given added urgency due to the floods that have affected many
57
parts of the country, especially production in Bangkok and surrounding

provinces in recent years.
Assembly of cars and production of automobile parts also constitutes
one of Indonesias main industries and is taking a growing share of
inward investment. This includes investments of US$250 million from
Nissan and US$800 million from Suzuki, US$246 million from Daihatsu
and US$100 million from Chrysler, all to build production plants.
Indias Tata Motors has said it has plans to establish Indonesia as its
manufacturing and distribution base in Southeast Asia, involving local
assembly and car components production.
Automobile industries also look likely to grow in less developed parts of
the Region. The Philippines and Vietnam have assembly operations,
which they are keen to extend. The two countries produced 52,000 and
41,000 cars respectively in 2013, to serve their local markets which will
expand as incomes rise.
Suzuki Motor Corporation has said that it plans to build a factory in
Myanmar by 2015, which would be able to produce up to 30,000 cars a
year. Mitsubishi Motors has also expressed an intention to develop aftersales service centres, while Toyota is also thought to be considering
vehicle manufacturing in the country.
As foreign manufacturers of cars, electronics, garments and other goods
consider where to invest in Asia, a key consideration remains production
costs. A relocation of production from areas where labour costs are
rising, for example China, is benefiting ASEAN countries.
58
As a result, Taiwan based Foxconn, the worlds largest contract

manufacturer of electronic products, including the iPhone, is considering
a reported US$1 billion investment in Indonesia, to manufacture mobile
phones, e-book readers, tablets and smart TVs.
In addition to welcoming foreign export manufacturers, Indonesia also
wants more firms to address the domestic market. According to
Indonesias Ministry of Industry, for example, the current import level of
70 million mobile phones, can be drastically reduced with domestic
production. As a consequence, the Government is providing tax breaks
to encourage local firms to supply the mobile market and subsequently
go on to produce other items, such as smart phones and tablets for sale
in Indonesia.
The World Bank says that both Indonesia and the Philippines have the
endowments to emerge as assemblers of final products and not just of
intermediate items. However, this would require deeper structural
reforms, including bringing down their trading costs through more
effective infrastructure investment and trade facilitation reforms, further
liberalisation of their foreign investment regime and avoiding loss of
competitiveness through sustained appreciation of their currencies.
(World Bank: East Asia-Pacific Economic Update April 2014)
ASEAN countries also need to move on from existing manufacturing
models, to produce more sophisticated high value goods ranging, for
example, from electronics products and advanced components, to a new
generation of low emission green vehicles and high-tech precision
engineering equipment.
According to the Organisation for Economic Cooperation and

Development (OECD) Middle income ASEAN countries will need,
over time to foster the progressive transformation of their
manufacturing industries, towards more sophisticated and
demanding activities with higher productivity and greater
dependence on technology.
In Malaysia and notably Singapore, the process is already gaining
traction with manufacturing operations being upgraded to those with
more value added production needs. In 2012, 39% of Malaysian
goods exports were in high skill and technology intensive
manufactured products, whereas the corresponding figure for
Indonesia was 11%. (icaew/ Economic Insight-South East Asia)
Singapores advanced infrastructure and high quality human resources
have drawn more than 30 of the worlds leading life sciences
companies to make the island their regional hubs. GlaxoSmithKline,
Abbott, MSD (Merck), Novartis, Pfizer and Sanofi Aventis have
invested more than US$4 billion, making the island a global
manufacturing base for a range of active pharmaceutical ingredients
and biological and nutritional products.
Development of human capital and innovation capacity are critical
in order to move up the value chain into higher productivity
manufacturing and service activities. Strengthening schools and other
educational establishments, as well as research and development
facilities are vital to this process.
Singapore has one engineering student for every 81 inhabitants, while
the ratio in Malaysia is one for every 121 inhabitants. In other parts of
Southeast Asia the ratio is one engineering student to every

300 inhabitants according to UNESCO. (icaew.com/economic
insight/southeastasia)
Southeast Asia can no longer be viewed as a low cost manufacturing
region. The quality and sophistication of its output is steadily
increasing. In Singapore, manufacturing accounts for 21% of GDP, a
higher level than in the US or UK, and yet its labour costs are
significantly higher than other ASEAN nations.
An average wage for a Singaporean working in the manufacturing
industry was US$3,375 a month in the third quarter of 2013, against
US$850 in Malaysia and US$350 in Thailand, according to Dezan Shira
Consultants. Its manufacturing sector remains highly competitive and
reflects a growing knowledge based economy which other ASEAN
members are now on the road to emulating. (ASEAN Briefing 5/8/14)
59
Diageo: Growing responsibly

across Southeast Asia
Diageo is the world's leading premium drinks business with an
outstanding collection of beverage alcohol brands across spirits, beer
and wine categories. These brands include Johnnie Walker, Smirnoff,
Croc and Ketel One vodkas, Baileys, Tanqueray and Guinness. Diageos
products are sold in more than 180 countries, employing 27,000
talented people worldwide. The company is listed on both the New York
Stock Exchange (DEO) and the London Stock Exchange.
CASE STUDY: DIAGEO
Diageo is the number one international spirits business in Southeast

Asia. We have grown to become the leading Scotch player: Thailand is
the fourth top market for Johnnie Walker globally and Vietnam is one of
the worlds biggest markets for super deluxe whisky. Indonesia is the fifth
largest market for Guinness globally.
60
We have a number of joint ventures and distribution partnerships across

the Region which provides us with deep local insights and access to
strong commercial channels. For example, in January 2011 we entered
into a strategic partnership agreement with Halico, the leading vodka
company in Vietnam.
Diageo is ideally positioned to capture the exciting opportunities for
growth. The underlying economic fundamentals are strong and regional
demographics are in our favour with over 100 million consumers in

Southeast Asia expected to enter legal drinking age over the next ten
years. With only 11% share, international spirits can only grow as part of
the total beverage alcohol market, presenting significant opportunities
for Diageo as the leading player in this category.
Diageo strives to earn respect and trust as a sustainable and valuable
contributor to society. Our approach to strong corporate governance,
and ethical and responsible business practices are critical to building
trust and respect among our stakeholders. This approach coupled with
our deeply-embedded values facilitates our licence to operate, secures
our supply of raw materials, generates business efficiencies, and
motivates our people.
Our companys success relies on our ability to make a positive
contribution in the societies within which we operate. We are focused on
three key areas: our contribution to the role of alcohol in society; socioeconomic development; and water management.
As a leading alcohol business, we take seriously our role in ensuring our
products are enjoyed responsibly, by legal age consumers who choose
to drink. We have long standing partnerships in Malaysia, Indonesia,
Singapore, Thailand and Vietnam to raise awareness of alcohol misuse

and to help address pertinent issues in the Region such as drinking and
driving and underage drinking.
Johnnie Walker has placed responsible drinking at the heart of its eight
year partnership with Vodafone McLaren Mercedes and in 2013
launched a global free ride home programme as part of its Join the Pact
responsible drinking campaign.
In Singapore, Johnnie Walker partnered with SMRT Corporation Ltd Singapores mass transit provider - to give away 10,000km of safe rides
home and the chance to be driven home by Johnnie Walker Global
Responsible Drinking Ambassador Mika Hkkinen. The country
wide campaign encouraged consumers to make a pledge not to drink
and drive. More than one million consumers around the world have
already signed a pledge never to drink and drive. The new safe
rides home programme seeks to attract an additional one million
personal commitments.
Singapores SMRT CEO, Desmond Kuek, launches #Imnotdriving campaign to support

Johnnie Walker pact to never drink and drive
On socio-economic development, Diageos Plan W initiative seeks to

empower women through learning across Asia Pacific. One billion
women will enter the global economy during the coming decade, but
many will not have received proper education or the opportunity to
develop professional skills. We therefore believe that empowering
women will make a positive impact on society. For instance, addressing
the inequality gap in our supply chain will support growth and increase
Diageo is proud to be leading the industry when it comes to womens

empowerment. We are the first alcohol beverage company to sign the
UNs Womens Empowerment Principles to promote gender equality in
the workplace, marketplace and community. 44% of our Board is
female, the second highest in the FTSE100 and 40% of the global
executive team are women. In 2012, we won the Opportunity Now
Female FTSE 100 Award.
available talent, while education and skills training to improve gender

equality, will lift people out of poverty and contribute to a communitys
economic performance.
61
Womens Empowerment Journalism Awards rewarded and recognised

excellence in reportage of womens issues and the work of journalists
who are raising awareness of womens rights.
Arthur Guinness Fund in Indonesia supports cooperatives like that of Karya Manunggal
to develop social enterprise skills
CASE STUDY: DIAGEO
Plan W seeks to do more. Our objectives with the initiative are to

improve gender equality in our workplaces, improve service standards
in the hospitality industry, grow skills in the communities in which we
operate, and raise awareness among our consumers. Since launching
the programme in December 2012, Plan W has empowered close to
60,000 women through learning, indirectly benefiting almost 300,000
community and family members.
62
As a partner to the travel and tourism industry, our ambition is to play

a role in developing the talent and skills pipeline, by proactively
including women, to meet the growing needs of our customers. Asia
Pacific will benefit from the expected growth in the travel and tourism
industry over the next ten years, with women representing two thirds
of this labour force. The inaugural Women in Tourism and Hospitality
Conference launched by Diageo in March 2014, convened subject
matter experts, key stakeholders and over 200 delegates, inspired new
ways of working to address talent and diversity needs in the sector. The
In Sri Lanka, the tourism industry is one of the fastest growing

industries, but it continues to experience a shortage of skilled
employees. In partnership with Plan W, CARE International therefore
developed a multi stakeholder programme to increase youth
employability through skills and knowledge enhancement, actively
encouraging women to consider the hospitality sector as a viable and
rewarding career path. The programme trains young adults in the four
key hospitality disciplines, including housekeeping, culinary, food and
beverage, and restaurant management, as well as key life skills to
prepare students to successfully meet the challenges of the working
environment. Graduates receive an accredited National Vocational
Qualification. All 87 graduates from the first intake were employed in
our partner Jetwings newest hotel in their local community.
In Vietnam, our partnership with the Centre for Social Initiative
Promotion trains women in social enterprise and works with university
students to develop social enterprises to improve their community.
Over 1,500 women received social enterprise training in the first year.
In Indonesia, Diageos Arthur Guinness Fund, in partnership with the
British Council continues to grow community based social enterprise
through training, such as Pelangi Nusantara which supports more than
100 women to produce products using recycled fabric from local
textile factories.
Diageo is committed to growing responsibly across Southeast Asia and
our footprint, enduring partnerships, and local expertise gives us the
scale and agility to take advantage of its opportunities.
For more information please visit: www.diageo.com or contact
Wilson DelSocorro, Corporate Relations Director SEA at
[email protected]
Emerging market specialist

RMA increases ASEAN presence
Developing sound business relationships that stand the test of time is a
difficult task for any company seeking to enter the lucrative, though
challenging markets of Southeast Asia. It is a process requiring
commitment, attention to local conditions, building relationships and
above all patience.
RMAs progress from a medium scale pharmaceutical distributor in
ASEAN markets to a diversified and fast expanding global group
underlines how sound this strategy has proven. The company has
steadily built up expertise in vehicle distribution and modification as well
as a reputation for engineering and more recently, in hospitality business
areas throughout the Region and beyond.
A growing reputation for automotive distribution as well as for high
quality modifications for vehicles deployed in remoter areas, gave the
company the foundation to diversify its representations, that as well as
vehicle manufacturers, now includes numerous engineering global
brands including 3M, SDMO, Land Rover and Jaguar.
It is successful implementation of projects in demanding environments
which lack infrastructure, that has helped establish RMAs reputation as
a reliable operator for such companies in post-conflict areas and
emerging economies.
The Group started life as a result of the acquisition in 1986 of the US
company Rochester Midlands regional pharmaceutical distribution
64
office in Bangkok. This created Rochester Midland Asia and RMA as it is

known today.
The company grew rapidly in its first decade, opening offices in
Cambodia, Lao PDR, Vietnam, Indonesia and most recently Myanmar.
The five divisions of RMA Group are: Automotive (wholesales & retail
distribution and modification/assembly), Infrastructure (heavy
equipment & power generation), Engineering Solutions (M&E,
construction, oil & gas services, urban planning), Hospitality (food
franchise management, airport restaurant management, hotel) and
Financial Services. The automotive business remains a core activity and
a strong relationship with the Ford Motor Company, provided the basis
for cooperation with other leading car and specialist vehicle
manufacturers including Jaguar Land Rover, General Motors, Mazda, and
many more.
In Indonesia, the company serves customers from offices in Jakarta,
offering products and services to the mining, oil & gas sectors as well as
the Government and for Non-Governmental Organisations (NGOs) in
the country.
The company has a highly successful record as distributor and supplier
of tailor-made vehicles. This includes modifying vehicles for specific
industrial uses such as mining and fitting out trucks and four-wheel drive
vehicles for deployment in demanding environments, which would
rapidly wear out standard vehicles. This expertise has made RMA a
valued supplier to aid agencies and Governments, highlighted by the
provision of more than 40,000 modified vehicles to Afghanistans
security forces.
According to Kevin Whitcraft, RMA Groups Chief Executive Officer, a
major emphasis is placed on support networks, investment in systems,
people and technologies to meet customer after-sales requirements.
RMAs supply chain capabilities and support mechanisms are every bit as
important as the quality and reliability of the products sold, he says.
The fast growing Group has a turnover of US$1 billion a year and is
supported by an operational presence in 21 countries. Backed by
distribution hubs located at Laem Chabang in Thailand and in Dubai at
Jebel Ali Free Zone, the companys activities are expanding and
continued growth in automotive and hospitality operations means RMA
Group now employs over 8,000 people.
Headquartered in Bangkok, the heart of the company and the bulk of its
business is still in Southeast Asia. The Groups automotive activities are
centred at Laem Chabang. An academy is also located at Laem Chabang
Port and Free Zone where Thai personnel and trainees from other parts
of Southeast Asia receive technical and soft skills training. (Refer to
www.rmaacademy.com for more information).
Placing local staff, who are properly trained, to take up positions of
responsibility and management is a core aim for RMA and an essential
element in growing the Groups business in the Region.
This strategy is reflected in the Groups recent move into Myanmar. Since
announcing the entry of the Ford brand to Myanmar in April 2013, the
company has stressed a commitment to investing in training resources
and bringing in technical experts to provide skills training for employee

technicians, sales and service personnel. A showroom, service centre
and spare parts storage facility has been set up in Myanmar for Ford by
Capital Automotive Limited, a joint venture between RMA Group and
Capital Diamond Star Group, a Myanmar conglomerate.
Myanmar is going to need an increasing number of skilled workers in
many sectors, not least, in the automotive sector. Most vehicles are
bought second hand and are more than ten years old, lacking warranties
or regular servicing. Ford is among a number of US companies which
are entering the country after the suspension of economic sanctions.
Myanmar, with a population of 60 million, could see demand for new
cars and other consumer items grow rapidly as foreign investment
accelerates and the economy expands.
RMAs long experience of automotive expertise is being leveraged by
working with Ford to provide first class training resources. This includes
65
Building on the business model successfully applied in

neighbouring countries, the company now sees
Myanmar as one of its brightest opportunities in the
ASEAN Region.
sending technician apprentices to an immersion programme at Laem
Chabang. The academys courses cover a wide range of services and
skills, from routine servicing of vehicles to more sophisticated repair
requirements. Courses in electronics and other more technical areas are
also provided.
In Myanmar, RMAs business development is still at an early stage. The
Group is in a position to engage in all types of construction, power
generation and mining, as well as support for Government agencies
and international aid organisations, in their development activities in
the country.
RMA diversified its operations in Thailand, Vietnam and Cambodia with
the acquisition of the Comin Group of Companies in 2011, reinforcing an
ability to provide mechanical and electrical installations and power
distribution networks, as well as heating and air conditioning systems
and water treatment plants. In addition, they also provide information
and communication technologies, particularly for security requirements.
66
Other RMA Group companies include Urban Solutions in the

Netherlands, which provides advice, consulting services for urban
planning and engineering projects. The UAE based Marsol Investments
provides specialist services to oil & gas companies, while Foreign
Correspondents Club of Cambodia operates restaurants and hotels in
Phnom Penh and Siem Reap.
The Group is also developing food and beverage franchises across
Southeast Asia, selling popular international brands such as The Pizza
Company, Svensens ice cream, Dairy Queen, Costa Coffee and Subway.
The Group manages a growing number of restaurants on a concession
basis in cities and at international airports in the Region, including
Phnom Penh and Singapore.
Hospitality is a fast developing area for RMA including Myanmar.
Building on the business model successfully applied in neighbouring
countries, the company now sees Myanmar as one of its brightest
opportunities in the ASEAN Region.
Myanmar presents a big challenge for companies seeking to advance

from just a representative office presence, to involvement in major
developments. Jones says they will have to compete with other
foreign businesses to recruit local staff with the necessary skill sets to
advance projects. He also says that this problem, though is being
eased to some extent as Myanmar nationals begin to move home
from jobs elsewhere in the ASEAN Region where they have picked up
vocational qualifications.
There are also numerous hurdles to overcome to obtain permits and
licences and a lot of patience is required. Foreign investors have to
find their own resources and tackle regulations that are rapidly
changing in a country where the state has a controlling role in most
sectors of the economy.
The Government is taking things step by step to foreign investment

and is working closely with foreign embassies on ways to foster
investment and growth after opening up an economy closed to
investors for the best part of 50 years, says Dale Jones, Country
Manager for the Group in Myanmar.
He believes that the ASEAN Economic Community will bring many
opportunities for the Group. Our home is in ASEAN and we are
present in most of the Region including Thailand, Cambodia, Lao PDR,
Indonesia, Singapore as well as Myanmar.
There are of course infrastructure problems throughout the Region
and these are seen most acutely in Myanmar. However, problems are
also accompanied by opportunities. Our traditional focus on emerging
markets and post-conflict areas means we are well placed.
RMA has linked up with two local companies - Capital Diamond Star
Group and MK Group. Partnering with local firms helps to develop
and maintain good relationships with Government and business
officials and provides excellent insight into the market and local
consumers. While the Group has been very fortunate in finding high
quality local partners to work with, it is not an easy process finding
those with the requisite experience and who share the same ideas and
where synergies can be found, Jones says.
RMA is also involved in numerous community projects in the Region.
In Myanmar the company is also sponsoring a new school with Ford
and its local partner, which opened in July 2014.
We plan to make ongoing investments that help support the
countrys economic and social development, which includes
professional skills training and career development for our employees.
As business grows, we expect demand for more qualified workers and
technicians to increase and more careers to be hatched, says Kevin
Whitcraft. These types of meaningful contributions will help drive the
tremendous potential and opportunity in Myanmar.
67
Spending on infrastructure accelerates

Sound infrastructure is vital for the long term growth and
competitiveness of emerging economies. In Southeast Asia,
improvements to connectivity and energy supplies are helping to
improve the standard of living of its people and making countries in the
Region increasingly attractive to investors. Expanding economies and
populations are demanding an even greater focus on development.
Recognising this, governments in the Region are providing investment
in transportation and power supply networks, alongside a raft of
improvements to bolster their economies, help rural communities and
to serve the growing needs of their fast expanding cities. The task is
enormous and this is reflected in projected investment costs.
The Region will need to spend US$950 billion on infrastructure by 2020,
to see that its economies grow and develop, according to Stephen Groff,
Regional Vice President of the Manila based Asian Development Bank
68
(ADB). The need to deliver transport projects is doubly important given

that 120,000 people are moving into Asias cities on a daily basis. Within
Southeast Asia, the urban population is predicted to double by 2020,
Groff says. (WSJ 29/5/14 World Economic Forum on East Asia)
Improvements to water supplies, sewage networks, energy and other
basic utilities can no longer be delayed, even though the costs of
constructing power stations and transmission networks are huge. The
Philippines Institution for Development Studies estimates that it will
require an investment of US$48 billion by ASEAN countries if the Region
is to achieve universal access to electricity supplies by 2030.
New railways, highways, ports, airports, power stations, dams and hydro
schemes all feature in this promised overhaul. The Philippines aims to
spend 5.2% of GDP on infrastructure projects by 2016, compared to
2.2% in 2013. In November 2013, Indonesia announced plans for 56
INFRASTRUCTURE
major new projects at an estimated cost of US$35 billion for

implementation between 2014 and 2017.
Among the projects are eight seaports, two airports, eight railways, five
power stations and 11 waste water treatment plants, as well as new
railway and roads.
The developments include an extension of the countrys main SoekarnaHatta International Airport in Jakarta, a US$1.3 billion development of
Cilamaya Port in Jakarta, the new Kertajati International Airport and
Jatigede Dam, both in West Java.
In addition, work on a 440MW power station project in North Sumatra
at Pangkalan Susu has begun. Construction of the initial sections of a
new 2,700km Trans-Sumatra toll road project was also due to start in
October 2014.
Development work has also begun on a new port at Kuala Tanjung in
North Sumatra, to boost coal and palm oil exports and on a new airport
in West Java, between Jakarta and Bandung, to relieve current pressure
on the capitals main international airport.
Indonesias economy has improved and its sovereign rating has been
upgraded to investment grade, making infrastructure investments more
attractive to investors and lenders, says Sobana Venkataraman, Principal
Investment Officer for the International Finance Corporation (IFC),
World Bank affiliate.
Indonesia has also eased regulations to make the infrastructure sector

more investor friendly, such as an amending law on Private Public
Partnerships (PPP) and passing a new Land Acquisition Law, says the IFC.
The countrys largest projects are proving attractive to investors. China
Railway Construction Corporation has agreed to invest in the 30km
Sunda Strait Bridge project, designed to link the islands of Sumatra and
Java. A consortium, that includes Japans J-Power and Itochu
Corporation, has also been selected to build a new 2,000MW power
plant in Java, expected to supply electricity to eight million people by
2016. (Bloomberg 4/10/13)
69
ASEANs massive infrastructure overhaul is underway

and due to build up considerable momentum. The
long term potential for investors is also huge.
In 2014, Thailands Interim Government approved a US$75 billion
masterplan to upgrade the countrys transport infrastructure over the
next eight years. The plan includes development of dual track railway
lines, to enable goods and materials to be transported faster and more
economically across the country. Elevated Mass Rapid Transit (MRT)
systems are also to be extended in Bangkok and the capacity of ports
and airports expanded. Meanwhile further consideration is being given
to proposals for a nationwide high speed rail network.
economic centres in the country, such as between Yangon, Mandalay

and Myitkyitna and Bego to Mawlamyine. (KPMG: Infrastructure in
Myanmar. kpmg,com/MM/en)
The more advanced parts of the Region are also moving ahead on major
expenditure. Singapore continues to develop its main international
airport at Changi. In 2013, the islands Land Transport Authority also
announced it would expand current MRT projects to double the length
of the network to 360km by 2030, by building two entirely new lines.
International assistance and long term loans on preferential terms will

help accelerate improvements for ASEANs less developed members.
Japan has agreed a soft loan of US$135 million to Cambodia, to help
develop the countrys electricity grid and for road improvements. The
loan helps, though it is estimated that the country needs at least US$16
billion of infrastructure investment in power plants, hydropower dams
and railways.
Malaysia has prioritised investment in infrastructure, believing that

upgrading existing transport links and building new roads and railways
will help propel the countrys economy to Developed Nation status by
2020. The largest project undertaken in Malaysia involves development
of a wheel and spoke railway system around Kuala Lumpur, to include
several new interconnecting stations. A high speed railway is also being
discussed to connect the capital with Singapore City.
Myanmar also has a focus on transport development. Under its
Framework for Economic and Social Reform, the Government has said it
will improve the quality of railway sections that connect important
70
The development of new Free Trade Zones is also a priority. The largest
projects are located at Dawei in the south with Thai investors, at
Kyaukphyu in the west with Chinese investment and at Thilawa with
Japanese assistance near Yangon.
All governments in the Region have huge demands on national budgets.

Given the large capital expenditures required for major infrastructure,
there are growing moves to mobilise private capital and external
resources to help fill the Regions funding gap. Looking to bridge the gap
between what is spent and what is needed for infrastructure projects,
governments across the Region are turning to PPPs.
There is evidence of growing involvement by private sector investors and
developers in infrastructure development. In 2013, BTS Group Holdings,
INFRASTRUCTURE
the operator of Bangkoks Sky Train, raised US$2.1 billion in an Initial

Public Offering (IPO) to fund expansion of the system.
A number of foreign companies have expressed interest in
development of Vietnams urban transit rail systems, particularly in Ho
Chi Minh City. Two projects have already secured funding from ADB,
European Investment Bank and the Spanish Government.
Since launching its PPP scheme in late 2010, the Philippines
Government has awarded projects to the value of US$1.4 billion, with
many more scheduled. Among the most urgently awaited projects are
a subway system and a new airport to serve Manila. The local San
Miguel Corporation has expressed interest in the estimated US$10
billion venture.
In 2014, Japans Hitachi Infrastructure Systems set up in Singapore, to
address information and control equipment needs for power and
transportation infrastructure developments in the Region. Singapores
Economic Development Board welcoming the move, noted that the
island is regarded as an Asian hub from which to develop, finance and
execute projects.
2014 has also seen the Singapore Government Agency, International
Enterprise (IE) and ADB launch an initiative to progress PPP
infrastructure development within ASEAN countries.
IEs Deputy Chief Executive Officer, Chua Taik Him, says that Singapore
based companies have an established track record implementing PPP
projects. Singapore also has a strong financial sector with
comprehensive capabilities to support infrastructure financing.
The two bodies intend to work with governments in the Region to
structure PPP projects, tapping into ADBs regional operations and
outreach to ASEAN member countries. It also aims to explore ASEANs
capital markets to finance or refinance these PPP projects.
In 2012, the ADB set up the ASEAN Infrastructure Fund (AIF). The AIF,
which is co-financed and administered by the ADB began lending at
the end of 2013, with Indonesia the first to receive a loan. This was
valued at US$25 million to finance expansion of electricity
transmission networks between Java and Bali, as part of an overall
US$410 million project.
In 2014, the AIF announced that Vietnam would receive a US$100
million loan towards a planned US$380 million power project.
It represents the largest sum yet to be agreed by the Fund for a
single project.
The AIF is planning to raise its US$500 million capital with a bond issue
to take place between 2016 and 2017, with regional banks as possible
investors, according to Bambang Brodjonegoro, the Funds Chairman.
The Fund is preparing for credit rating analyses that will support a
successful bond sale which could attract the central banks of China,
Japan, South Korea, and other countries, Brodjonegoro says. The
availability of greater capital will allow the AIF to also lend to the
private sector or state-owned enterprises undertaking PPPs. (Reuters
23/5/14)
Whatever the funding mechanisms chosen, ASEANs massive
infrastructure overhaul is underway and due to build up considerable
momentum. The long term potential for investors is also huge in areas
such as high-speed rail and energy.
Both Vietnam and Malaysia are considering development of nuclear
power as an option while the Philippines has the potential to draw on
very large proven geothermal resources. Some countries in the Region
have the potential to develop natural resources to provide for both
their domestic power needs and a surplus for export to neighbouring
countries, with Cambodia and Lao PDR, for example, keen to develop
renewable energy via their hydropower resources.
71
Railway projects promise huge regional benefits

The case for railway development within, and between ASEAN countries
with land borders is clear cut. A move to haulage for both freight and
passenger traffic will meet economic, social and environmental
requirements by lessening the need for trucks and buses to transport
goods, commodities and people over both long and short distances.
extending the countrys outdated 5,844km rail network. There is growing

demand to develop efficient transportation networks between the rural
hinterland and principal urban centres of Yangon and Mandalay. It
currently takes almost twice as long to travel by train between Yangon
and the capital Naypyidaw than by road.
Given the complexities and investment costs involved, the process of

expanding rail haulage is long term but is beginning, and as Southeast
Asias GDP growth continues to be robust, development of transport
infrastructure is a growing priority. Prospects for better mainline rail links
are also improving with many projects now underway, or in the planning
stage, including high speed networks.
Improvements will require track renewal, replacement of sleepers and

upgrading of signalling and communications systems, in addition to new
rolling stock, passenger cars and locomotives. (Asian Development Bank)
It is, however going to take massive investment and commitment to

move traffic from roads. Nevertheless the Regions attitudes are
changing. Zaldy IIham Masita, President of the Indonesian Logistical
Association, says he identifies an increasing shift from using trucks to
trains. We expect that the completion of the Jakarta-Surabaya double
track railway would make the train the logistical backbone in Java.
(Jakarta Globe 18/3/14)
Myanmar, which is opening up to foreign investment, needs to
modernise fast in order to fulfil its potential. This means renovating and
72
Myanmars Government is committed to improve the quality of rail

sections, especially those connecting important economic centres such
as Yangon-Mandalay-Myitkyina and Bago-Mawlamyine. Japan
International Cooperation Agency (JICA) has completed a feasibility
study on the proposed US$1.7 billion modernisation of the YangonMandalay link, a major attempt towards developing the network.
There are also plans to establish a link between India and Myanmar,
which will join Assam in India with Kalay in Myanmar. A survey team
from Indias state owned engineering consultancy RITES has conducted
a feasibility study for the 250km track proposal. India has pledged a
US$500 million credit line to Myanmar, including US$155 million for
development of railway infrastructure.
TRANSPORT
While a railway revival is beginning to take place in Myanmar, Thailand

and Vietnam are also implementing significant projects. In addition,
major enhancements to urban systems are underway in busy
metropolitan conurbations in Malaysia, Singapore and the Philippines.
The US$5.2 billion electrification and double tracking of the 329km railway
linking Ipoh in Perak State with Padang Besar in the north of Peninsular
Malaysia, is one of the countrys largest ever infrastructure projects.
Another strategic Malaysian rail project involves development of two
north-east-south-west radial lines and a circular line forming a wheel and
spoke system around Kuala Lumpur and the surrounding Klang Valley
region. Four major interchange stations are part of the plan. In addition,
a monorail project in Putrajaya, 25km from Kuala Lumpur and the
development of an east coast rail route are being considered. A high
speed link between the capital and Singapore City is also proposed.
(IFSEC SE Asia 3-5 2014)
Such long term capital intensive projects are often beyond national
budgets. As a result, increasingly, the Public Private Partnership (PPP)
model is seen as the most viable means of reviving long dormant
transportation ventures throughout the Region. Development of major
transport infrastructure ventures in partnership with the private sector
are already well established in Malaysia and Singapore.
Singapore is working on a number of new Mass Rapid Transport (MRT)
projects including two new lines and extensions to existing track. The
underground 30km long Thomson Line and the Eastern Region Line will
add 48km to the network.
Singapore is also upgrading older parts of its rail network. In 2013, the
Land Transport Authority announced further development of the MRT
network, that aims to expand the system to 360km by 2030, doubling
the existing length.
Indonesia meanwhile, is pressing ahead with a range of railway projects
designed to stimulate the export of bulk commodities such as coal.
South Koreas Hyundai Engineering and Construction Company has

signed a memorandum with Russias RZDstroy to build a US$1.6 billion
railway in East Kalimantan (Borneo) to carry coal from mines in the
centre of the island to the coast 192km away. (Yonhap news agency)
A number of urban mass transit ventures are planned in conjunction
with the private sector, including a link between central Jakarta and the
capitals Soekarno-Hatta International Airport.
Investment in urban transportation needs is also being prioritised in
Thailand, with six new mass transit systems proposed or being built in
Greater Bangkok. The plan is to provide the capital with 410km of electric
railway by 2020. Other proposals include construction of a light railway
system in the southern Thai resort of Phuket, to connect the citys
international airport with tourist destinations. A monorail system has also
been proposed for Chiang Mai in the north of the country.
73
Southeast Asia is becoming a focus market for rail

industry suppliers as long awaited proposals for new
rail and mass transit projects move nearer to the
implementation phase in several countries.
In Vietnam, Japans Hitachi is working on a 20km urban railway line in
Ho Chi Minh City, designed to connect the centre of the metropolis with
Suoi Tien, a major bus terminal in the northeast of the city. The project
calls for both underground and elevated track. The company will also
maintain the system for five years after the US$657 million project is
completed in 2016. The project is one of a number or urban railway
ventures underway or planned in both Ho Chi Minh City and the capital
Hanoi. (Hitachi and International Railway Journal)
The PPP model also features strongly in plans by the Philippines
Government to develop railway and mass transit projects. Canadas
CPCS Transcom is working on a feasibility study in the Philippines for a
900km line running from Cagayan to Sorsogon on the countrys main
island of Luzon. The estimated US$2.5 billion project is also expected to
be developed as a PPP venture. Studies are also being carried out for a
90km airport express link to Manilas international airport.
Thai railway projects include 767km of double tracking of existing routes
as well as construction of new lines to connect major provinces in the
74
centre, north and northeast of the country. The latter would provide direct
connections between regions rather than routing through the capital.
Other proposals call for a 105km stretch of track from Sisophon to Siem
Reap, a 239km connection between Siem Reap to Skun through Kampong
Thom. In addition, a 273km long track is proposed to run from Snuol to
the border with Lao PDR and passing through Kratie Province and Thala
Borivat in Stung Treng Province. (www.opendevelopmentcambodia.net)
The various projects will improve links between Thailand and its ASEAN
neighbours. A medium term goal is also intended to take the strain off
Thai roads and improve logistic efficiency by increasing the share of rail
in freight transport from less than 2% to 8% by 2020. (Australia
Unlimited 13/11/13)
Vietnams Ministry of Transport announced a draft plan in August 2013,
to build a broad gauge railway connecting Hanoi and Ho Chi Minh City.
According to Deputy Transport Minister, Nguyen Ngoc Dong, the plan
has three components. First is to upgrade the existing gauge railway,
second to build a wider broad gauge double track line to accommodate
TRANSPORT
container traffic and third, two express sections that could accommodate
high speed traffic. The estimated investment cost has been put at US$8
billion. (www.think-railways.com)
It currently takes between 29-33 hours to cover the 1,726km between
Hanoi and Ho Chi Minh City on a one metre gauge, single track route
dating back 100 years. Journey times were even longer just a decade ago
when they averaged 72 hours. Fewer stops and realignment to the track
has helped reduce travelling times to current levels but the railway needs
further modernisation.
Cambodia and Lao PDR face even greater development challenges,
with the latter possessing only 4km of track. Although Cambodias land
area covers about 181,035km2, the country has only two railway lines
with a total combined length of little more than 600km.
These mainly comprise a 336km connection between Phnom Penh and
Poi Pet on the Thai border and a 266km line running from the capital to
the seaport at Sihanouk Ville.
The Korean International Cooperation Agency (KOICA) has completed a
30 year plan for the Cambodian Government for a systematic
development of a national rail network. The Government has also
granted a 30 year concession to the Australian based Toll Holdings, as
part of plans to rehabilitate the entire rail network. One of the present
aims is to repair the system to international standards and also restore a
missing link between Sisaphon and Poipet.
term, the future of rail transport in the Region may be high speed
networks. The Chinese Government which has built its own and still
expanding spectacular high speed system, is keen to extend such links
to neighbouring countries to connect these to Kunming in the southwest
of China.
However, railway development also calls for careful attention to
environmental impact in sensitive areas and adequate compensation
for communities displaced in areas where new track is developed.
The process is going to be long term but ASEANs new railway age
is beginning.
High speed rail links promise transport revolution
Most rail traffic in ASEAN countries is slow, dedicated to freight haulage
running on metre gauge single tracks with locomotives proceeding at a
leisurely 20-70km/h. The double tracking and electrification now taking
place to modernise systems will provide improvement but the real
longer term breakthrough is seen in High Speed Rail (HSR) networks,
with trains travelling at 250km or more an hour.
In parallel with these initiatives, a number of Chinese sponsored

investments have been proposed, including a 257km line from Bat Deng
to Kratie on Cambodias border with Vietnam, at a reported cost of
US$686 million. A much more ambitious proposal would see Chinese
companies building a 405km track to link a proposed steel plant and
mining area in Preah Vihear with Sihanouk Ville.
While China is very keen to build and to see progress on this ambitious
venture, the first dedicated high speed link in the Region may be built by
Singapore and Malaysia to connect Kuala Lumpur with Singapore City.
Singapores Prime Minister, Lee Hsien Loong, declared in 2013, in a
press conference with Malaysias Premier Najib Razak, that a decision will
be made within the next year or so, over the planned 330km HSR
connection, adding that many areas of the project need to be settled,
ranging from design, finance and governance, to security and
immigration requirements. HSR is very expensive, requiring dedicated
track and specialist rolling stock and locomotives. The mooted
Singapore-Malaysia HSR project could cost US$12 billion, a sum almost
approaching the US$14 billion allocated for development expenditure
under Malaysias 2014 budget. (Straits Times 7/4/14)
Southeast Asia is becoming a focus market for rail industry suppliers, as

long awaited proposals for new rail and mass transit projects move
nearer to the implementation phase in several countries. In the long
Similarly, huge capital expenditure will be required elsewhere in the

Region to enable high speed concepts to get underway. An HSR trunk
line running through Lao PDR would advance the country into the 21st
75
century railway age. Suggestions that the Lao PDR Government will
borrow a multibillion dollar sum to pay for the cost of the project, have
caused concerns over the amount of debt that the country would be
taking on. (Daily Telegraph/Asian Development Bank)
Originating in Kunming in southwest Chinas Yunnan Province, the
high speed track is also planned to cross the border from Lao territory
to Bangkok in Thailand. Quite apart from the financial challenge,
construction of the line will be a massive engineering task.
An estimated 154 bridges, 26 tunnel sections and more than 30 new
stations will be required to take the track just 420km from Boten on
the border with China to the Laotian capital of Vientiane. (Daily
Telegraph 9/1/14)
Thailand has more than 4,070km of usable track and has plans for four
HSR lines ranging over 1,447km, at an estimated cost of US$26 billion.
These projected HSR routes include a line between BangkokPitsanuloak reaching to Chiang Mai, which is viewed as the countrys
logistics hub and a tourism destination. A line from Bangkok to
Nakhon and Ratchasima will extend to Nong Khai Province that will
serve as a gateway to Vientiane. Another line will stretch from the
capital to Rayong, Thailands eastern seaboard industrial hub and deep
sea port. Another track will join Bangkok to Hua-Min, a portal to the
countrys tourist destinations in the south. (New York Times 1/1/13)
76
The north eastern line designed to connect Bangkok and Nong Khai is
the main focus, since it will traverse through Lao PDR to connect with
Kunming in China.
During an address to Thailands Parliament in October 2013, Chinas
Prime Minister, Li Keqiang stated that there was enormous potential
for railway cooperation between the two countries and expressed his
countrys willingness to participate in Thai HSR ventures. (Xinhua news
agency 24/10/13)
The process of developing HSR across mainland Southeast Asia is only
just beginning. In spite of the daunting investment costs, the potential
long term benefits are recognised throughout ASEAN. The challenge is
to mould viable economic proposals and financially control the
costliest projects ever undertaken in the Region.
TRANSPORT
New container ports

strengthen ASEANs global reach
In an archipelagic region that includes some 24,000 islands spread
across 5,200km east to west and 3,400km from north to south,
Southeast Asia is defined by the sea.
The maritime sector is crucial to ASEAN countries connectivity, with
shipping services, ports, shipbuilding and seafaring core activities, in
vast parts of the Region. For centuries the Region has been a crossroads
of global seaborne trade, a fact reflected in the scale of ASEANs
maritime industries.
Singapore is the fifth largest register of shipping in the world, with some
3,339 vessels carrying that countrys flag with a total of almost 90 million
tonnes. Singapore, Malaysia and Indonesia, Vietnam and Thailand
operate some 8,233 sea going merchant vessels.
The Philippines ranks as the largest single supplier of manpower to the

global shipping industry with an estimated 1.5 million Filipino seafarers,
comprising one of the countrys largest sources of remittance earnings
at some US$4.8 billion a year.
Recent decades have seen a growing focus on shipbuilding in the
Region. Indonesias shipbuilding industrys annual capacity has reached
800,000 Dead Weight Tonnes (DWT) and also ten million DWT for ship
repairs. The Government has set a goal to develop larger vessels,
particularly tankers up to 70,000 DWT by 2015.
Malaysian shipbuilders have sound credentials for manufacturing
offshore oil industry support vessels and cruise ships. Malaysia is also
keen to enhance its role in ship repair and maintenance.
77
maritime facilities. There are many areas requiring improvement in order

to promote a safe, modern, efficient and competitive shipping sector in
the Region.
While relatively frequent container shipping services connect ports along
the coasts of east Malaysia and Brunei with Southeast Asias major hub
ports, Singapore Port Klang and Port of Tanjung Pelapas (PTP), shipping
services within the Indonesia Malaysia Philippines-East Asia Growth Area
(BIMP-EAGA) have scope for considerable improvement. (ADB)
Myanmars ports can become regional transportation hubs serving
markets in China, India and the Indo-China region. Growth in imports
and exports as a result of increased demand for the countrys agricultural
commodities, minerals and natural resources, are expected to present
opportunities in the development of port infrastructure.
A shorter international trade route to and from Europe would allow
companies to save on transportation costs and time. Dawei, Thilawa
and Sittwe as well as sites in Kalegauk and Bokpyin have been identified
for potential port developments.
There are around 120 shipbuilding and repair facilities in the Philippines
and some 45,000 working in the industry. The countrys yards are
capable of building a wide range of vessels up to 180,000 tonnes.
In Vietnam there are about 150 shipyards of which around 30 have an
export capacity, building a range of vessels including tankers, bulk carriers
and multi-purpose vessels. (Royal Norwegian Embassy Hanoi 2013)
The creation of the ASEAN Economic Community (AEC) is based upon
the free flow of goods and people. This in turn depends on the
establishment of an efficient and integrated maritime transport sector in
the Region.
Possessing access to the worlds oceans is little advantage without
modern ports, sound logistics facilities and effective management of
78
The giant multibillion dollar Dawei project, while still at the planning
stage, promises to transform logistics in the Region. Plans include an oil
transhipment port, a refinery, steel mills, a petrochemical industry and a
major electricity generating station. The development also calls for road,
rail and oil pipeline routes running from Dawei into Thailand to link up
with north-south transport infrastructure.
India meanwhile is assisting in the construction of a US$120 million port
in Sitte, located on the Bay of Bengal in Myanmars Rakhine State. The
port will offer an alternative for shippers currently transitting freight
through Bangladesh.
There are growing pressures on other countries in the rest of the Region
to also enhance port facilities, particularly container handling capacities.
Container ships carry an estimated 52% of global seaborne trade in
terms of value. Their share of the world fleet has grown almost eightfold
TRANSPORT
The creation of the AEC is based upon the free flow of

goods and people. This in turn depends on the
establishment of an efficient and integrated maritime
transport sector in the Region.
since 1980. Containerised cargoes are a significant part of intra-ASEAN
trade. Many commodities including rice, previously moved as bulk
cargoes, are moved in containers. (World Shipping Council 2013)
However, modern container vessels are also increasing in size. In less
than a decade container ships have almost doubled in size. Ships able to
carry 18,400 containers are due to enter service in 2014. Essentially such
newer vessels no longer carry their own cranes to offload boxes and
depend on seaports to provide specialised handling equipment. This
trend poses a challenge to smaller ports, especially in developing
countries. (UNCTAD Review of Maritime Transport 2013), (Asian
Development Bank Myanmar Sector Initial Assessment 2012)
Larger ASEAN ports also have to address pressures on their existing
container handling capacity. Box traffic at Malaysias Port Klang is forecast
to rise by 6.5% to 11 million Twenty-foot Equivalent Units (TEUs) in 2014,
while an increase of 4.5% is predicted at the countrys Port Tanjung
Pelepes, to 8.29 million TEUs. (Business Monitor International)
A similar increase is expected at Ho Chi Minh City, Vietnams busiest
port, where container throughput is forecast to rise to 4.62 million TEUs.
An increase in tonnage is also expected at Da Namg Port with a 7% rise
forecast to 5.36 million tonnes in 2014. (Business Monitor International)
Gross tonnage at Thailands Laem Chabang, the countrys largest port, is
expected to rise by 3% to 69 million tonnes in 2014, with container
handling predicted to expand 2.3% to 6.18 million TEUs. At the Port of

Bangkok, Business Monitor International (BMI) projects that tonnage will
grow by 4.2% in 2014, to 20.23 million with container handling growing
7% to 1.61 million TEUs. (Business Monitor International)
In the more developed areas of Southeast Asia, huge investments are
being made to keep pace with demand. In Singapore, a US$2.8 billion
investment at Pasir Panjang Terminal will see the facility expanded to
handle some 15 million TEUs a year, including the latest technology to
allow operation of unmanned gantry cranes.
A big effort is now underway in Indonesia to build up container handling
capacity. Until recently, weak operational performance of Indonesias
port sector and a low level of investments in infrastructure have tended
to hold back development of the countrys maritime sector. (OECD)
Although Indonesia is the worlds fourth most populous nation and
Southeast Asias largest economy, ocean carriers presently offer no
direct mainline services to either Europe or the US due to port
capacity shortages.
Many of Indonesias ports suffer from shallow drafts. The countrys
largest current port, Tanjung Priok in north Jakarta on the northwest
coast of Java, has a maximum draft of 11.5m and cannot accommodate
vessels longer than 250m. The largest ships that can dock there carry a
maximum load of 5,000 TEU containers. This means they are only
79
suitable for intra-Asia services and as far as Australia, but nowhere large
enough for voyages to the US or Europe, routes where time and costs
are key considerations.
Shippers pay a premium to access long haul international services, via
feeders at Asian transhipment hubs such as Malaysias Port Klang and
Port Tanjung Pelepes as well as Singapore.
The UK port of Felixstowe, for example, can be reached in 18 days from
Malaysias port of Tanjung Pelepas but the same journey takes 23 days
from Jakarta. At best, Hamburg can be reached in 20 to 22 days from
Malaysias other main maritime facility at Port Klang but at least another
4 to 5 days is added to journey time if ships are routed from Jakarta via
Port Klang.
Port performance data for 19 regional container ports in Indonesia
suggest that berth occupancy rates are high by international standards,
leading to berthing delays and excessive waiting time, while average
turnaround time is high. (ADB Southeast Asia Working Paper)
The Indonesia Logistics Association estimates that logistical costs
currently consume between 25%-30% of annual GDP. In 2011, a study
by the Netherlands based international container terminal handling
company owned by Maersk Group, APM Terminals, advised that
investment by Indonesia was urgent with at least 6 to 7 million container
handling capacity required by 2015 and an additional 1.5 million in place
by 2020.
Development of the new Priok Port container terminal complex near
Jakarta, will be a major step in helping modernise port operations in the
80
country by cutting transit times and reducing logistical costs. Also known
as Kalibaru Port, the facility including a container terminal is due to open
in mid 2015. The port will have a depth of 18m, giving mainline container
lines deploying ultra large container vessels the option of adding Jakarta
to liner schedules.
The state owned corporation PT Pelabukan Indonesia (Pelindo 11),
which is responsible for both the existing Tanjung Priok serving Jakarta,
and the new Priok Port has set up a joint venture with Japans Mitsui, to
build and operate the first terminal with an annual capacity to handle 1.5
million TEUs. Two further terminals are due to be completed by 2018,
raising annual handling capacity by an additional 4.5 million TEUs.
Pelindo 11 believes the three new container terminals will reduce
logistical costs sharply. According to London based shipping consultants
Drewry removing the premium imposed on Indonesias container
shippers will take some time, but adding more port capacity and
encouraging carriers to offer direct mainline services is the first
step. (Drewry)
Philippines model can transform sea trade
The main delay to improving port developments and expanding
maritime service in Southeast Asia remains the cost. However, there are
hopes that this intractable problem can be addressed by the expansion
of services provided by roll-on roll-off (Ro-Ro) ships. These types of
vessels do not require cranes for loading and offloading because the
goods carried are rolling cargoes including buses, cars and trucks which
simply roll on and off ships. As a result the requirement for expensive
container handling and infrastructure is avoided.
TRANSPORT
advantages are that large upfront capital investment is not needed and
an entire system can be built up gradually, including port facilities and
road connections, said the bank.
Nautical highways have also revealed new markets for agricultural and
fishing produce by making it viable to reach new areas in a cost
effective and timely way. Companies too have been able to reduce
costs by closing a significant number of warehouse and storage areas,
since frequent and direct deliveries mean that they can access clients
easily through Ro-Ro shipping networks.
In terms of the wider Region, there is growing potential to operate RoRo links between the Philippines, Indonesia, Thailand, Vietnam,
Malaysia and Singapore. The establishment of these vessel services
was a top item at the BIMP-EAGA strategic planning meeting held in
Davao in February 2014.
It is a method of maritime connectivity, when accompanied by

investment in roads and railways which can stimulate a range of
economic sectors such as agriculture, manufacturing and tourism, by
creating much larger markets for private enterprise. In archipelagic
nations such as Indonesia and the Philippines, maritime economic
corridors are seen as having considerable domestic impact and are set
to have an even wider influence as they begin increasingly to carry
over maritime borders.
The concept has already proved its worth in the Philippines, where the
Asian Development Bank concludes that the approach and experience
warrants serious consideration for the whole ASEAN Region. The
In 2013, a Ro-Ro service started from Davao and General Santos City
in the Philippines to Bitung City and Manado City in Indonesia. There
are also plans for Ro-Ro service between Batangas City in the
Philippines to Da Nang in Vietnam and Humen in China. (Philippine
Daily Inquirer 27/9/13)
Enrico Basilio in charge of USAIDs Advancing Philippine
Competitiveness Project, a four year initiative that started in 2012,
points out that the Philippines does not yet trade with Myanmar, Lao
PDR and Cambodia because goods have still to be trucked overland
to Bangkok. If we can do it from Batangas to Da Nang in Vietnam, that
truck can end up in those countries via an ASEAN Ro-Ro system. The
Ro-Ro network presents a new way of trading. (Manila Bulletin
18/12/13)
81
Focus on airport investment intensifies

There is a shortage of airports in many parts of Southeast Asia and even
international airports serving major cities in the Region are running out
of capacity and increasingly stretched by millions of passengers. One
consequence is that new landing slots are becoming very hard to obtain.
(Economist 17/5/14)
Industry analysts Frost & Sullivan estimate that passenger throughput at
ASEAN airports will rise to 233 million passengers in 2014, an increase of
10% since 2011. By 2025, the Regions airports are predicted to handle
more than three times the volume of movements handled in 2005.
(Inter airport Southeast Asia 2015 Show)
The entry and rapid development of budget airlines is responsible
for much of the increased traffic. Growth of discount carriers has
been phenomenal and they continue to drive the aviation market in
the Region.
However, these newer Low Cost Carriers (LCCs) are finding expansion
increasingly constrained by a lack of airport infrastructure, particularly in
82
the Regions vast archipelagic areas. Unlike Europe, the Region has far
fewer smaller or disused airports that LCCs are able to use.
If current aviation growth is going to be sustained, investment in airports
and associated technology, safety and security, needs to keep pace with
the expansion in every country in the Region.
Brunei expects to double annual handling capacity in 2014 to
accommodate three million passengers. Indonesia with 210 airports
has a particularly urgent need to modernise and expand facilities to
accommodate huge passenger demands. (Inter airport Southeast
Asia 2014)
Kuala Lumpur International Airport (KLIA) had a passenger throughput
of almost 40 million in 2013. Growth of up to 11% through to 2018 is
projected for KLIA. An annual growth in numbers of between 10% and
12% is predicted over the same period at Manilas Ninoy Aquino
International Airport, where passenger numbers grew 8.8% to 32.1
million in 2013. (AIN Singapore Air Show 2014)
AVIATION
Singapore already possesses a highly advanced aviation infrastructure

and is working on ambitious plans to double its passenger handling
capacity by the mid 2020s. A fourth terminal at Changi International
Airport, designed to handle 16 million passengers per year, is due to be
completed in 2017. The facility is being built on the site of a building
previously used to accommodate budget airlines, which will move to the
airports Terminal 2.
The overall expansion strategy is being overseen by Changi Group,
which manages a global portfolio of international airports. The Groups
Singapore strategy includes building a third runway and a fifth terminal,
able to handle up to 50 million passengers per year by the mid 2020s,
in addition to the fourth already under construction.
Singapore is also planning a US$161 million research programme into
future air traffic control requirements. The improvements are designed
to double the airports current capacity to around 130 million
passengers annually and cement Singapores leading role as a hub of
Southeast Asian business. (Changi Airport Group annual report
2013/Straits Times 5/3/14)
Kuala Lumpur, Bangkok and Jakarta are also embarking on major
expansions to consolidate and develop their roles as both regional and
international hub airports. Kuala Lumpur International Airport (KLIA) and
Bangkok's Suvarnabhumi Airport also aim to accommodate substantially
more flights and passengers. A new terminal to accommodate budget
airlines opened at KLIA in 2014. This has raised the airport's overall
passenger handling capacity to 70 million passengers.
In the near term, airports of Thailand wants to expand Bangkok's
principal Suvarnabhumi International Airport, Asia's sixth busiest, to
handle 65 million passengers annually. The airport had a throughput of
51.4 million passengers in 2013, a figure though down from the 53
million recorded the previous year is still 18% above the capacity
originally envisaged when it was opened in 2006. Construction of a third

runway, terminal and parking bays would expand the airport to handle
nearly twice as many passengers as it currently does.
The Authority has plans to develop Don Muang, Bangkok's first
international airport, that is now used by low-cost airlines. Located north
of Bangkok it was re-opened in 2012 to help relieve congestion at the
main airport and is handling 16 million travellers annually but was built
to handle at most 10.5 million. (Reuters 23/8/13) (Nikkei Asian Review
30/4/14)
Expansion projects are also underway at Phuket International, which
handles travellers heading to Thailands beach resorts, is also stretched
handling 9.5 million passengers a year, well above its designed capacity
of 6.5 million passengers. A new terminal, in addition to aircraft parking
bays is under construction there.
83
Growth of discount carriers has been phenomenal

and they continue to drive the aviation market in
the Region.
Vietnamese officials have agreed that a major new airport should be
built at Long Thanh, some 35km outside the city. This is aimed to relieve
pressure on Tan Son Nhat International, which currently serves Ho Chi
Minh City, the countrys main commercial centre.
The planned airport with two runways would be capable of serving
25 million passengers a year and 35 million annually if a third runway
was added.
In neighbouring Cambodia, a US$100 million project to expand
passenger terminals at Phnom Penh and Siem Reap began in 2014. The
upgrades are needed to accommodate the increasing number of tourists
visiting the country that rose to 4.2 million in 2013, compared with 3.68
million in 2012. The countries main airports, including Sihanoukville are
operated by Frances Vinci Group. (Ministry of Tourism/ The Cambodia
Daily/Vinci Group)
Philippines conglomerate, San Miguel Corporation, has expressed
interest in building a US$10 billion new airport featuring four runways to
serve Manila. A plan drawn up by the company calls for construction of
the airport on an 800 hectare site near the existing airport and will
involve reclaiming part of Manila Bay. (Reuters 15/5/14)
Manilas Ninoy Aquino International Airport (NAIA), has three terminals
but just one runway and is already operating well beyond its designed
capacity of 20 million passengers a year. The airport experienced a
throughput of more than 30 million in 2013.
84
The nearest alternative airport at present is the former Clark air base
which is a two hours drive away from Manila. There have also been
suggestions that the two facilities could provide a dual airport solution
to serve Manila located on Luzon, the countrys largest and most
populous island. This would see NAIA designated as a southern
aviation hub and the former air force base at Clark, with its two lengthy
runways, as a northern aviation centre for the Region. (ACI World Issue
3/ 2013)
Meanwhile Philippines Department of Transportation and
Communications is seeking to spend US$138 million to develop and
modernise Kalibo International Airport, which is serving an increasing
number of tourists travelling to resorts on Borocay Island.
Singapores SilkAir and Malaysias AirAsia have said they expect to launch
routes to Kalibo as a result. AirAsia intends to make Kalibo International
Airport a secondary hub to offer up to 320 domestic and international
flights to South Korea, Taiwan and Malaysia. (Airport News 21/5/14)
Improved connectivity is also high on Myanmars development agenda,
where increasing interest in the country, not least from tourists is putting
pressure on an old and underdeveloped aviation infrastructure. While
there around 70 airports, not much more than half of these are
operational and have only limited capacity.
Of Myanmars serviceable airports only Yangon, Mandalay and
Naypyidaw are capable of handling international flights. Other airports
AVIATION
have runways that are either too short or lack the necessary safety and
security facilities.
The Government plans to add two international airports to meet future
requirements, as the country increasingly opens to foreign investment
and tourism.
A new international terminal opened at Yangon airport in 2007 and is
due for a further upgrade by Pioneer Aerodrome Services, a subsidiary
of Singapore based, Asia World Group. When this is complete, the
airport is expected to serve up to six million passengers a year by 2018,
compared to the 2.7 million in 2013. (Myanmar Times 24/7/14)
Japans Mitsubishi and Jalux are due to improve Mandalay International
Airport. However, the largest new project comprises a plan to develop
an entirely new airport on a 3,642 hectare site, 86km from the centre of
Yangon at Hanthawaddy, at an estimated cost of US$1.5 billion.
The long awaited project is expected to have an annual capacity of ten
million passengers. Once it is built it will help ease the pressure on the
countrys principal international airport at Yangon. At present Yangon
relies on one runway which is also used by Myanmars air force.
Daweis domestic airport is expected to be expanded and modernised to
accommodate international flights. A key consideration though, is the
projected development of a major new port and special economic zone.
Given the size of required investment, Myanmar in common with other
countries in the Region is seeking to accelerate the building of new
airports as Public Private Partnership (PPP) schemes. The developments
promise to transform the Regions economic prospects and underscore
its important role in global aviation.
Indonesian airports development takes off

Indonesia, with the largest population and most extensive area of any
ASEAN member, has the greatest need for aviation infrastructure
investment. Out of 26 of the largest airports, 16 are operating above
designed capacity with Jakartas Soekarno-Hatta International Airport
the most congested. Many other aviation links in the country also
require expansion.
The two state-owned airport operators PT Angkasa Pura 1, which
operates aviation infrastructure in the eastern and northern parts of the
country, and PT Angkasa Pura 11 which is responsible for airports in the
western part, aim to address the problem by new airports and
modernising and extending existing facilities.
In the west on the most populous island of Java, Soekarna-Hatta
International Airport, serving Jakarta is in particular need of expansion.
Built to handle 22 million passengers annually, the airports designed
85
capacity has long since been exceeded and now handles double this
number. Today, it handles more passengers than Kuala Lumpur, mostly
as a result of the expansion of budget carriers. As a result since 2012,
Halim the capital citys former international airport has had to be reopened to scheduled commercial flights in order to relieve congestion.
An US$805 million expansion of Soekarna-Hatta will see the annual
passenger handling capacity of the terminal serving domestic routes
doubling to 18 million, while capacity at the international Terminal 2
will increase from 9 to 19 million passengers per year. Almost half the
investment though is aimed at increasing capacity at Terminal 3,
which is used mainly by budget airlines, from 4 to 25 million
passengers annually. (ACI World Airport development news Issue 3,
2012)
The aim is to build a new airport to ease pressure on Soekarna-Hatta
International. Karawang International, about 50km east of Jakarta is
part of the Governments masterplan for the Acceleration and
Expansion of Indonesia Economic Development programme and is
intended to be constructed under a PPP format.
The new airport is planned as a staged development, with handling
capacity eventually rising to 70 million passengers a year. Together
with Soekarna-Hattat, this would make Jakarta one of the worlds best
connected destinations.
Karawang is one of two new airports planned for the West Java region,
with Kertajati International expected to replace Bandungs busy Husein
Sastranegara International Airport. Another planned venture is
86
Kulonprogo International Airport in Yogyakarta. (ACI World Airport

Development News Issue 4 2013)
PT Angkasa Pura 1 intends to build new terminals and expand three
crowded airports in Semarang, Central Java, Banjarmasin in South
Kalimantan and Surabaya East Java, which is the countrys third busiest
airport. (Airport development News issue 3, 2013)
They are also investing US$228 million, to almost double capacity at
Balis international terminal to handle 15.3 million passengers per year.
(Jakarta Post 1/4/14)
A major regional airport has already been completed at Medan at a
cost of US$527 million. The new Kuala Namu Airport replaces the old
Polonia airport that previously served the city, now the largest on
Indonesias island of Sumatra. The new facility also features a 30km
dedicated rail connection to the city. (Financial Times 21/5/13)
Expansion of Balis Ngurah Rai International Airport, as well as projects
at Sepinggan Airport in Balikpapan in East Kalimantan and at Juanada
Airport in Surabaya in East Java, are expected to be completed in 2014,
according to the Transportation Ministrys Airport Director, Bambang
Cahyono. (Jakarta Post)
Indonesias Transportation Ministry is also funding a US$224
programme due to be completed in 2015, involving improvements
of nine smaller airports in the east of the country in Java,
Sulawesi, Marmasa and Maluku. Others across the archipelago
are due to be upgraded as part of a vital programme to develop the
countrys connectivity.
AVIATION
Regions aviation expansion surges ahead

Southeast Asias sustained economic growth is being accompanied by a
prodigious expansion of aviation services. According to industry
forecasts, air travel within the Region is projected to grow at an average
annual rate of 6.7% over the next 20 years. (Boeing Current Market
Outlook 2013-2022)
This trend is reflected in aircraft manufacturers order books. In 2014,
carriers in the Region are due to take delivery of some 230 aircraft valued
at US$20 billion. (Reuters 9/2/14)
The Sydney based aviation consultants, Centre for Asia and Pacific
Aviation (CAPA), estimate that with an order book set to surpass 2,000
aircraft, airlines in Southeast Asia will have a total fleet of 1,800 aircraft
by the end of 2014. Asia-Pacific planes or orders make up 36% of the
world total and the figure is rising according to Airbus. (CAPA Southeast
Asia report)
Airbus and Boeing have published growth predictions for Southeast
Asias aircraft market, with the former forecasting that Asia, as a whole,
will take more than 7,000 twin-aisle and 20,000 single-aisle airliners
over the next 20 years.
There is plenty of evidence to back these estimates. Established Low Cost
Carriers (LCCs) such as Malaysias AirAsia, have placed orders for
hundreds of aircraft. Indonesias Lion Air, has started taking delivery of a
record order of more than 500 Airbus A320s and Boeing 737-800s. More
recent budget airline entrants, such as VietJet and Nok Air are purchasing
nearly 100 Airbus A320s and 15 Boeing 737s respectively. Myanmars Air
Mandalay has also agreed a potential US$400 million order to purchase
six Mitsubishi MRJ90 regional jet airliners with options on a further four
aircraft. (Myanmar Times 24/7/14)
Full service carriers are also expanding. Malaysia Airlines expanded its
fleet from 121 aircraft to 127 in 2013, while Indonesias Garuda added 14
new aircraft to its fleet of 88 aircraft.
Vietnams fast growing economy and increased popularity as a tourism
destination is also supporting the expansion of the flag carrying airline
Vietnam Airlines. The carrier has plans to acquire 35 new aircraft over
the next three years, while the launch of an Initial Public Offering (IPO)
is also awaited.
In February 2014, the countrys leading budget carrier, VietJet, confirmed
a US$9 million order involving 63 Airbus A320s with options on a further
30 of the aircraft. Bangkok Air also placed an order for six French
manufactured ATR 72-600 turbo-prop aircraft. (Airbus PR 11/2/14)
State-owned carrier Lao Airlines has acquired further Airbus A320s, while
privately owned Lao Central Airlines is also beginning to develop. More
expansion is also expected for Cambodia Angkor Air as it starts routes to
China. Elsewhere in the Region, Royal Brunei Airlines has become the
first airline in Southeast Asia to begin operating Boeings new 787 longrange airliner. (Boeing/Airline Lender bi-monthly)
Myanmar, one of ASEANs most populated and largest member states,
is the most under served aviation market in Southeast Asia at present.
However, the countrys aviation sector is beginning to develop fast with
international passengers growing from 49,392 in April 2012 to 110,000
by January 2014. Frequency of flights across Myanmar airspace has also
increased from 400 to 600 flights a day, according to Myanmars Civil
Aviation Department. (Consult Myanmar 28/4/14)
There are now 22 international carriers operating services to and from
Myanmar and more are expected as the countrys tourism sector opens
87
up. One of the main aims of a masterplan being drawn up with the help
of the Japan International Cooperation Agency (JICA), is the introduction
of direct flights to destinations in Europe, Australia and the US, which will
save travellers having to go via Bangkok, Singapore or the Middle East.
These are times of expansion in the Regions aviation sector which will
accelerate further with the moves to emulate the liberalised aviation
environments that have been established in other parts of the world. The
drive towards an ASEAN Single Aviation Market (ASAM) is designed to
foster a competitive aviation market and to propel the Regions airlines
into bigger regional and global markets. (CIMB/ASEAN Aviation Ready
for Takeoff)
ASEAN is working towards establishing the same high standards of flight
management and regulation that are standard in the US and across the
European Union. This requires setting up a common aviation authority,
which would operate on the same lines as the US Federal Aviation
Authority and the European Aviation Safety Agency.
The intention is ultimately to create a single aviation market without
constraints on regional airlines ownership or their ability to fly between
points in countries other than where they are based. This would allow
carriers to operate in the same way as EU airlines where the likes of Ryan
Air or Easyjet are able to provide services between cities in European
states other than the UK, in addition to cross-border flights.
An easing of market restrictions has already encouraged established flag
carrying airlines in the Region including, Singapore Airlines, Garuda, Thai
Airways and Vietnam Airlines to develop low-cost subsidiary airlines.
These include Thai Airways offshoot Thai Smile and Singapore Airlines
subsidiary Silk Air, which has 68 Boeing 737 airliners on order.
The rise of LCCs has been a phenomenon of the global aviation industry
over the last decade. In Southeast Asia their development has been
88
particularly evident and tailor made for large populations living in vast
archipelagic regions such as Indonesia and the Philippines.
Some of the worlds busiest budget airline routes are now located in
Southeast Asia. These include Singapore to Jakarta and Kuala Lumpur to
Bangkok. According to Airbus, LCCs comprised 25% of the total seats
sold across Southeast Asia in 2013, compared to 2% a decade earlier.
This is illustrated in the Philippines, where the cost of air travel has
declined significantly with the ticket price for the Manila-Cebu route
falling by half in real terms between 1997 and 2012. This has allowed
many Filipinos to fly for the first time avoiding lengthy road journeys.
(Philippine Airways).
The Philippine domestic market has the highest LCC penetration rate at
67%, followed by Indonesia with a penetration of 60%. In Malaysia and
Thailand LCC penetration has surpassed 50%. (AIN online Singapore Air
Show 2014)
According to CAPA, nine out of 15 of the worlds busiest low-cost
international routes are in Southeast Asia. As a consequence, ASEAN
AVIATION
airlines are expanding fast and it is the only region where there are
more aircraft on order than exist in current fleets. Southeast Asias LCC
fleets grew by about 19% in 2013 to 485 aircraft. In 2014, they are
projected to increase by another 18% to 573 aircraft.
as Airbus A320s. Citilink expects to operate 80 airliners by the end of

2015, expanding to regional routes outside of Indonesia, resulting in
fleet acquisitions including Boeing twin-aisle 787s and Airbus A350
aircraft being considered.
Airbus has 579 outstanding orders to supply low-cost carriers with

A320 jets in the Region. Boeing has a further 318 outstanding orders
for its 737 series, as well as 16 orders for its long range 787 airliner.
Malaysia based AirAsia, is currently the largest LCC group in the
Region, with an in-service fleet of 172 aircraft and is already branching
out, with routes to North Asia and Australia.
New LCCs have continued to develop, including the flag carrier

Garudas subsidiary Citilink, AirAsia and Singapore based Tigerairs
affiliate, Mandala. The biggest entrant by far being Indonesias privately
owned Lion Air.
Six carriers in the Region operate under its brand. These include
Indonesia AirAsia and Thai AirAsia. The airline group also operates
from the Philippines as both AirAsia and Zest Air. In Malaysia
another franchise, AirAsia X has been set up to operate long-range
budget routes.
The budget sector continues to expand. VietJet launched in 2011 and
has already surpassed Jetstar Pacific as Vietnams largest LCC. There
are nearly 30 LCCs operating in the Region, including Malindo which
was launched in 2013, as a joint venture with National Aerospace and
Defence Industries (NADI) of Malaysia and Lion Air of Indonesia.
Driven by LCCs, Indonesias domestic air travel increased 20% in 2012
to 72.5 million passengers, making it the worlds largest domestic
aviation market after the US, China, Brazil and Japan. Indonesias
Transportation Ministry estimates that the number of air travellers will
reach 100 million in 2014, up from nearly 94 million recorded in 2013.
Garuda, Indonesias budget subsidiary, Citilink, is one of the fastest
growing LCCs in the Region. It operates a modern fleet, including ATR
turbo-prop airliners built by Airbus and Italys Alenia Aermacchi, as well
The latter and its regional subsidiary Wings Air operate a fleet of
122 aircraft and account for half of Indonesian airlines domestic
seat capacity. With almost 600 aircraft on order, the Lion
Group has ambitious plans to expand into regional and other
international markets.
A number of the Regions budget airlines are now forging medium
and long haul routes beyond ASEAN. In the Philippines, Cebu Pacific,
Jetstar Pacific which is owned by Vietnam Airlines, Australias Jetstar,
Singapore Airlines subsidiary Scoot and AirAsia are branching out to
Australia and North Asia.
Singapore Airlines and Nok Air have set up a joint venture known as
Nok Scoot to operate Boeing 777 twin-aisle airliners on medium to
long haul routes from Bangkoks Don Muang airport.
Whatever the immediate concerns, the relaxation of market
regulations among ASEAN countries has removed many traditional
impediments to growth, and new opportunities can be exploited.
According to Lion Airs Chief Executive Officer, Rusdi Kirana, his airline
is still seeing load factors of 90% compared to a global average of
75.9%, while the market is growing by 15% a year, he notes. (Aviation
Week 10/3/14)
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Aircraft Maintenance Repair and

Overhaul (MRO) services continue to grow
Airlines in the ASEAN Region are poised for rapid expansion over the
next two decades, as they take delivery of an estimated 3,000 new
commercial aircraft by 2032, in an investment estimated at US$500
billion. Key trends during this period will be a continued expansion of
the Regions Low Cost Carriers (LCC), a growth phase for the Regions
tourism industry and the extension of aviation services including
Maintenance Repair and Overhaul (MRO) services. (Focus ASEAN
23/5/14)
Southeast Asias surging aviation expansion is being accompanied by a
rapid development of MRO service providers. Singapores MRO market,
for example, has grown by an average of 13.3% a year since 1992. This
growth mirrors a worldwide trend where global spending on MRO for jet
aircraft and turbo-props is set to increase to US$57.7 billion in 2014, says
US based industry analyst Team SAE.
Much of the this future servicing requirement will be in the Asia-Pacific
region and particularly Southeast Asia, where regional airlines are among
the fastest growing in the world. Boeing forecasts that fleets of airlines
within the Region will triple in size to 3,490 aircraft by 2032, from 1,110
in 2012.
Lufthansa Tecknik Philippines, estimates that more than 37% of global
commercial aircraft will soon be based in the Region, with many of them
in service with LCCs.
Rajiv Biswas, Chief Asia-Pacific Economist for US based IHS Global
Insight, believes that Singapore is particularly well positioned to benefit
from this trend. The island is currently the leading hub for MRO in Asia,
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accounting for 25% of the market and is expected to be a one of the

beneficiaries of the Regions fast expanding aviation growth.
Elsewhere, the new hangars being developed in Malaysia, the
Philippines, and Indonesia and perhaps Myanmar and Vietnam, shows
the Region is creating credible MRO options, according to Brian Hogan
of Singapore based XSQ Aviation Consultancy.
Backed by a pool of over 100 aerospace companies, Singapore has
garnered a quarter of the Asian MRO market, says the Singapore
Economic Development Board. Many are being established as a result of
joint ventures with foreign companies, including the original equipment
manufacturers and also the airlines, providing services to ensure aircraft
safety and airworthiness.
There is already a well established MRO capability in some ASEAN
countries which are able to bid for work from international and regional
airlines. A full provider is able to service and repair airframes, engines
and provide component services. Singapores MRO sector, the largest in
Southeast Asia, has an annual turnover of some US$5.8 billion,
employing more than 18,000 people.
International aerospace companies active in MRO activities in Singapore
include Raytheon, Pratt & Whitney, Rockwell Collins, Goodrich,
Honeywell Aerospace, Hamilton Sundstrand, Nordam and Lockheed
Martin. GE Aviation is also due to manufacture components at its plant
at Loyang in Singapore. In 2013, Frances Safran Electronics Asia and SIA
Engineering signed a joint venture for an avionics components
repair centre.
AVIATION
Many of these companies activities are located at Seletar Aerospace

Park at a former British air force base in the north-east of the island. The
site is spread over 300 hectares and accommodates MRO ventures,
design and manufacture of aircraft systems, components production as
well as training.
The US Goodrich provides nose to tail servicing of airliners at its
160,000m2 site at Seletar, which is the companys largest global facility.
Eurocopter also has an 8,200m2 facility at the park for MRO, training and
research and development activities.
Singapore Airlines fast expanding MRO affiliate, SIA Engineering
Company (SIAEC), also operates from there. In July 2014, Boeing and
SIAEC established a company to service the US manufacturers aircraft in
the Region. SIAEC already provides line maintenance services at 34
airports in nine countries and has agreements with 26 other original
equipment manufacturers worldwide and within the Region.
The new agreement covers SIEAC, providing MRO services for Singapore
Airlines Boeing 777-300ER aircraft and the fleet of new 787 airliners
ordered by local budget carrier Scoot.
The largest local MRO company is Singapore Technologies Aerospace
(STA), operating since 1976, when it was established to service Singapore
Air Force aircraft. Now with a global reach, the listed company has 8,000
certified engineers and operates 30 twin-aisle and 11 narrow body
airliner bays, with one third of these in Singapore alone. STA recently
added two new hangars at Seletar, to cater for growing narrow body
aircraft MRO services and passenger to freighter conversions. Civil
business now comprises 70% of the companys average annual US$1.4

billion revenue.
Malaysia is also a major aerospace engineering hub in the Region, with
the Governments Economic Transformation Programme focusing on
MRO services as a key industry to expand value added industrial
development and skilled employment. (Focus ASEAN 23/5/14)
The countrys MRO industry contributed US$1.8 billion to the national
economy in 2013, and comprised around 17% of the total Malaysian
aerospace market, according to the Malaysia Industry Government
Group for High Technology (MIGHT).
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Southeast Asias surging aviation expansion is

being accompanied by a rapid development of MRO
service providers.
A number of leading international MRO players have established a
presence in Malaysia including General Electric, Eurocopter, Hamilton
Sundstrand, Honeywell Aerospace, Parker Hannifin, Germanys MTU as
well as Lufthansa Technik and the Anglo-Italian Agusta Westland.
With major principal aerospace centres located at airports in Subang,
Sepang and Senai, Malaysia is now seen as a main aviation hub
participant for the Asia-Pacific region. This has resulted from leading
industry players including Airbus and Switzerlands SR Technics setting
up in the country. (Malaysias Economic Transformation Programme
2013 annual report)
The Zurich based Group, which is owned by Abu Dhabis Mubadala
Development Company, is expected to create 240 jobs at Subang, where
its 1.4 hectare facility operates under US and European aviation safety
agency approvals. SR Technics will focus on avionics panels and
accessories, hydraulic pumps and actuators, cockpit seats, water and
waste components, ball screw actuators, chillers, fan lights, motors,
ovens and valves. The company said that it would transfer hydraulic
control units and pneumatic components, including thermostats and
valves to Malaysia in the second quarter of 2014. (Airline Update.com
21/8/14)
The company intends to use its Subang site as its regional customer
service and distribution centre. From here it would serve its Asia-Pacific
integrated components services clients and manage all of their
component supply needs.
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Malaysian MRO expertise has also been enhanced by Sepang Aircraft

Engineering (SAE) expanded facilities, opened at the end of 2013. Based
at Kuala Lumpurs International Airport adjacent Free Zone, in a
17,000m2 purpose built hangar, the facility is designed to service
Airbus aircraft.
At the opening, Prime Minister, Najib Razak, declared MRO to be an
important sector for job creation. The target is to capture a 5% share of
the global MRO market for Malaysia, generating a turnover of US$4.2
billion and helping to create more than 20,000 new jobs.
Other parts of the Region are also developing MRO hubs. VietJet is
considering setting up an operation in either Ho Chi Minh City, Hanoi or
Da Nang. Air France recently selected Lufthansa Technik Philippines
(LTP) to provide MRO services for the latters A380 fleet. As a result, the
company has built a third hangar to accommodate its growing volume
of work.
Philippines based Cebu Air, in tandem with SIAEC, is also developing a
second hangar to expand their maintenance site at the former Clark air
base on Luzon Island. The facility will then be able to handle wide-body
as well as single-aisle aircraft.
Thailand also aims to develop the country as a full service aviation hub.
MRO industries and training bodies are being encouraged to set up in
Bangkok at Suvarnabhumi International Airport. Studies are also taking
place to develop Nakhon Ratchasima Airport, 220km northeast of
Bangkok, as a new service centre.
AVIATION
Indonesias MRO sector is forecast to expand 10% a year over the next
decade, according to projections by GMF AeroAsia, Indonesias largest
MRO company. In line with this forecast, the company was due to
commission two further hangars in 2014 in Jakarta, designed to service
Boeing 737 and Airbus A320 single-aisle airliners.
At the end of 2013, Garuda Maintenance Facility AeroAsia (GMF) signed
a service agreement with SR Technics for component repairs in Jakarta.
Under the agreement, GMF will act as SR Technics regional support
workshop for approximately 100 parts and the latter will develop GMFs
existing in-house repair capabilities accordingly.
In August 2013, Indonesias Lion Air, the Regions fastest expanding
airline, said it intended to build a US$250 million maintenance hub at
Hang Nadim International Airport, on Batam Island. Batam Aero
Technics facility is on course to build four hangars at Manado airport in
north Sulawesi. The new facility complements an existing MRO facility
operated by the company at Surabaya Juanda airport in east Java.
Located just a 45 minute flight from Singapores Changi International
Airport, the facility at Batam features an extended 1,278m runway, able
to accommodate the largest airliners. This could help the new facility
becoming a keen competitor to Singapore and Malaysia for MRO
business in the Region.
The future for MRO throughout Southeast Asia is positive. However, the
Region will need to keep investment high in new technology, and training
an ever increasing number of engineers and technical staff. There is, for
example, a need for technicians to speak and read good English, which is
the global language of the aviation industry, as well as MRO manuals
says, Heinz Freimann, SR Technics General Manager at Subang.
Jemsly Hutabarat, Vice President of Sales & Marketing at GMF AeroAsia,
points out that, whatever low cost labour is available, the MRO sector
demands that personnel are trained and certified to meet international
aviation requirements.
Recruitment and training at all levels is therefore an increasing focus for

companies in the sector. Organisations that recognise the value of
training and are prepared to invest in this resource should cope best.
(Team SAI)
Aerospace industries move up the value chain
In addition to servicing the technical requirements of airlines in the
Region, ASEAN countries are developing increasingly sophisticated
aerospace assembly and manufacturing as well as Research and
Development (R&D) activities.
Aerospace Malaysia Innovation Centre is researching an optimal algae
strain to produce jet fuel. Malaysian aero structures company,
Composites Technology Research Malaysia (CTRM), is a specialist in
production of composite parts.
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The latter, based near Batu Benendum airport in Malacca, is a partner

in the Airbus A380 programme. It is also producing components for
Boeing 737, 767, 777 and 787 airliners and has work share on
development types such as the Airbus A350. The company has stated
its ambition to move into fuselage work, to further enhance its role in
airliner production.
In Indonesia, PT Dirgantara is a licenced assembler of Airbus Super
Puma helicopters, as well as Messerschmitt-Boelkow-Blohms BO105
light helicopters. The Regions aerospace companies are steadily
moving up the value chain, taking on increasingly more complex work.
Singapore is already established as a world class aerospace design
location, with some of the biggest global original equipment
manufacturers having a presence on the island. Companies including
Boeing, Airbus, Rolls-Royce and Thales have entered into partnerships
with local universities and research institutes, to study advanced
materials, fuel cells and repair technologies. European Aeronautics
Defence and Space company (EADS) has chosen Singapore to
establish its first research and technology centre outside Europe.
By 2018, Singapores aerospace output is expected to more than
double to at least US$9 billion, according to projections by the
Economic Development Board (EDB).
Production of engine casings and gears, valves and electrical
power systems, are among a range of aerospace products already
produced in Singapore factories. On the R&D front, Boeing
EADS, Pratt & Whitney and Rolls-Royce are all involved in major
engineering programmes.
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In 2012, Rolls-Royce launched its Seletar Campus where engine

assembly and testing, training, research and development are carried
out on the companys 134,000m2 site. By the end of 2013, the
company had produced 50 of its Trent 900 engines there. The engines,
which are among the most powerful in the companys range, power
the giant Airbus A380 airliner.
This strategic move to Seletar by Rolls-Royce involved establishing the
companys first titanium wide chord fan blade manufacturing plant
outside the UK. The facility, will eventually produce half the companys
aero engine output and expects to be employing 2,000 workers by the
end of 2015, most of them Singaporeans.
In 2013, Pratt & Whitney also started development at Seletar, of its first
geared turbo fan hybrid blade and turbine disk manufacturing plant
outside of its US base. These and other investments in the Region
indicate that the of role of ASEAN countries in global aerospace
production is becoming more influential and likely to develop further
over the years ahead.
IT & TELECOMMUNICATIONS
ASEANs digital advance

Southeast Asias keen attention to the modernisation and liberalisation of
telecoms services over the last 20 years, has been an essential factor in
driving ASEAN economies to be among the fastest growing in the world.
Reforms to the provision of telecoms services in the Philippines, for
example, initiated in the early 1990s, have been largely responsible for
fuelling the countrys business expansion since then. Deregulation of the
sector transformed it from a virtual monopoly into a competitive market
and from a poor and limited network, to an expanded system offering
better services at much lower cost, allowing new businesses to thrive
according to the World Bank.
A willingness to invest heavily in technical solutions in the Region has
also been important. The introduction of a national high speed
broadband network has been a priority in Malaysia, for instance, with the
country committing US$3.7 billion to install fibre optic cable links to 1.3
million homes over the last four years.
Singapore, has also invested heavily and now ranks as one of the worlds
most advanced digital societies, way ahead of other countries in the
Region when it comes to fast internet access, with average speeds of 61

mega bytes per second (Mbps).
Cross-border initiatives are also of strategic importance. The agreement
signed in Kuala Lumpur in March 2014, to build SEA-ME-WE 5 fibre optic
cable is designed to connect Southeast Asia, the Middle East and
Western Europe, in order to provide faster, better quality internet and
data services to businesses in the three areas. The existing cable does
not have sufficient capacity to accommodate projected internet traffic.
The 20,000km long cable linking Singapore and France, is expected to
be operational in 2016, and is designed to provide transmission speeds
of up to 100 gigabytes per second (Gbps). The cable is due to be
operated by a consortium of 15 companies resident in countries along
the route including Myanmar Posts and Telecommunications (MPT),
SingTel and Telekom Malaysia.
The new cable, will serve to ease the strain as well on other telecoms
networks linking Europe and the two regions, many of which connect via
the US at present. With significant growth in data traffic in recent years,
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SEA-ME-WE 5 will address the urgent need for a new generation data
superhighway, to cater for the increasing demand for next generation
internet applications, says Bill Chang, Chief Executive Officer of
Singapore Telecommunications. (SingTel PR)
The benefits to countries with advanced domestic telecoms
infrastructures, such as Singapore and Malaysia, will be substantial but
even for the less developed areas of Southeast Asia, it provides a greater
opportunity to join the digital world.
At present, Myanmar with a population of 60 million, has one of the
lowest rates of telecoms and internet access in the world and has a
particular need to modernise its system. Reform of its telecoms sector is
an integral part of lifting millions of people out of poverty, says Ulrich
Zachau, World Bank Country Director for Myanmar. Bold new
investments are due to accelerate the process.
In 2013, MPT selected Norways Telenor and Qatar based Ooredoo to
build new mobile networks, bringing in foreign companies for the first
time to a country where less than 7% of the population has access to
telephone services.
The companies have paid US$500 million each for their 15 year licences.
Telenor has said that it expects funding costs, including the fee and
accumulated losses until revenue streams break even, to peak at US$1
billion. High front end costs are seen as a risk worth taking.
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Ross Cormack, CEO of Ooredoo Myanmar, told Forbes Asia this is the
last frontier of telecoms. He said they intended to apply the same
strategy as it has in India and Iraq by tailoring pricing for individuals
rather than marketing standard packages which could mean a weekly
rate for Facebook access, for example, priced at less than 10 cents.
Ooredoo has said it will begin selling affordable SIM cards in Naypyidaw,
Yangon and Mandalay in 2014, and provide its cellular 3G service to 97%
of the population by 2019.
Other international companies have also pledged substantial investment
in Myanmars telecoms sector. Japans mobile operator KDDI and the
trading house Sumitomo Corporation, signed an agreement with MPT in
July 2014 to invest US$1.96 billion to jointly operate a new mobile
telephone business. KDDIs Senior Vice President, Yuzo Ishikawa
IT & TELECOMMUNICATIONS
As increasingly advanced telecoms and ICT technologies

evolve in Southeast Asia, the Region is set to advance its
social development and enhance its credentials as a
leading focus for international investment.
commented: We have entered what could be called the last rapidly
growing market. With our telecoms infrastructure, we hope to greatly
contribute to the development of Myanmars economy. (The Japan
Times 17/7/14)
All of the new entrants face considerable challenges. Telenors Head of
Asian Operations, Sigve Brekke, says the company has never entered a
market before where the need is so visible.
Johan Adler, Chairman of Ericsson Myanmar, which is providing network
equipment and managing services on behalf of Telenor, recognises a
need to address problems relating to land access. This is required for
network infrastructure to be installed in support of the new licenced
cellular operators in the country.
Adler also identifies difficulties in ensuring reliable power supplies and
adequate road access to every site, in order to ensure rapid delivery of
services, particularly in remoter areas. According to research by Deloitte,
around 15,000 towers, in addition to thousands of kilometres of fibre
optic infrastructure will need to be installed.
However, the benefits of a successful roll-out of mobile telephone
services have already been illustrated in Cambodia. The latter has
avoided a costly rebuilding of fixed-line telecoms infrastructure by its

launch of cellular services.
The number of fixed-line customers, as a consequence, has remained
largely static at around 50,000 subscribers for more than a decade. In
contrast the cellular area has boomed with the number of mobile
telephones greater than the countrys population of 15 million. By the
end of 2013, there were around 20 million mobile subscriptions served
by five companies, with the largest networks operated by Viettel Metfone
and Smart Mobile.
Access to the internet for the mass of the Regions population has
become available for the first time through their mobile phones. Figures
compiled by German research company GfK, indicate consumers in
Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the
Philippines purchased 41.5 million handsets in 2013, at a cost of
US$10.8 billion.
In Malaysia, mobile data services are predicted to become the key driver
for cellular operators and their earnings from these are expected to
surpass mobile voice revenue in 2017, according to industry research
analyst International Data Corporation (IDC). (IDC 22/7/14)
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Internet users in Vietnam and Thailand, driven in part by their younger

populations, spend the greatest amount of time online in the Region,
according to the US digital analyst comScore Inc. The latters 2013
report says, that with 16.1 million monthly internet users, Vietnam has
the largest online population in Southeast Asia. (www.comscore
Southeast Asia Digital Future in Focus report)
The number of internet users in Indonesia expanded by 13% in 2013,
compared to 2012, with internet penetration standing at around 28%.
This indicates though, that the vast majority of the countrys people in
a population of 240 million, are still without internet access.
Introduction of high speed broadband services though is increasing
the potential for more advanced mobile devices to connect with
internet content. As a result, industry analyst Frost & Sullivan expects
smart phone penetration in Indonesia to rise to 50% in 2015, from just
9% in 2012. (www.indonesiainvestments.com)
Much of Indonesias internet usage, as elsewhere in the Region,
reflects a high demand for social media applications and video
content. Facebook is the main social network with Southeast Asia,
comprising one of the media providers top global markets by visitor
penetration. Twitter, Linkedin and Tumblr are also gaining, as social
networking captures the largest percentage of consumers in the
Region. (comScore Southeast Asia Digital Future in Focus)
While social networking is the focus of broadband internet access, the
technology also promises a huge change in the way services are
provided from Government, social and medical services and
businesses. Applications such as video conferencing, television
broadcasting and online banking can all benefit from broadband.
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The internet, combined with advanced Information Communications

Technologies (ICT), represents the most essential building block of
social and material progress as well as a digital bridge to the most
advanced global economies.
The Philippines Business Process Outsourcing (BPO) industry has
grown 25% a year over the last decade, employing a few thousand
people in 1999, to 800,000 people in 2013, and is expected to employ
one million people by 2016, the World Bank estimates. (World Bank
Philippines Development report 2013)
Southeast Asias ICT and telecoms progress is no longer limited to a
few countries. A forecast in 2013 by industry analyst Gartner, estimated
the value of ICT services provided in Singapore, Thailand, Malaysia
and Indonesia alone would total US$74 billion by 2017.
The ICT Ministers of the ten ASEAN member countries have drawn up
a masterplan that seeks to improve mobile applications for use in
areas such as healthcare provision, transport and e-governance.
Another aim is the provision of broadband internet access to every
school in the ASEAN community, through development of policy
frameworks and a national statistics portal.
The World Bank meanwhile is to provide a US$31.5 million loan to
Myanmar to help set up an online portal for Government services and
information, which will develop outreach strategies to apply new
technologies in rural areas.
As increasingly advanced telecoms and ICT technologies evolve in
Southeast Asia, the Region is set to advance its social development and
enhance its credentials as a leading focus for international investment.
MINING
Region seeks sustainable

model for its mining sector
Southeast Asia possesses vast mineral resources, with both precious
metals and industrial ores. Coal is the most abundant fossil fuel. The
proven reserves, for example, are sufficient for 80 years of production at
present levels, according to estimates by the International Energy Agency.
Much of these reserves are located in remote areas which often lack basic
services. Their exploitation and the income generated can serve to
provide employment and to bring improvements to infrastructure, such
as power supplies and roads to isolated communities.
Many ASEAN economies are driven by the extraction of natural resources.
Foreign Direct Investment (FDI) in the sector is high and in 2012,
accounted for 17% of Indonesias FDI and 20% in Malaysia, with almost
93% of FDI in Lao PDR going into mining ventures.
The mining industry has been one of the key sectors supporting
Indonesias economic growth. The sector makes a significant contribution
to Indonesias GDP, exports, Government revenues, employment and
perhaps, most importantly, the economic development of the countrys
remote regions. (Jakarta Post 27/11/14)
Indonesias extensive mineral deposits are distributed throughout the
country with mining a major activity in provinces such as Papua, BangkaBelitung, West Nusa Tenggara and East Kalimantan.
The country ranks as the worlds main exporter of thermal coal, as well
as the second largest in tin and the third and fourth copper and nickel
respectively. The mining sectors total output is predicted to rise to
US$146 billion a year by 2016, compared to US$82.6 billion in 2010.
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Some of the biggest increases are expected to be seen in production of

coal and nickel, with annual growth rates of around 10%. (Business
Monitor International)
Other parts of the Region offer similar mining potential. The Philippines,
with some nine million hectares of highly mineralised areas, is estimated
to have some of the worlds biggest reserves of nickel, gold and copper,
according to the countrys Mines and Geosciences Bureau (MGB).
Philippines Finance Minister, Cesar V Purisima, has said that the
Government is committed to tax legislation that features a fair sharing
where both the mining company, which takes the risk and the one who
owns the assets, are fairly rewarded.
Vietnam also possesses large coal reserves. The countrys output of
anthracite coal is considered most suitable in steel production, while
Indonesian steam coal is best suited for power stations. Both countries
are net exporters of coal, with Thailand, the Philippines and Malaysia
importers of steam coal to fuel their growing number of coal-fired
power stations.
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Given the capital intensive and long term nature of the mining industry,
investment will be needed from the global market to fund the exploration
and development required to boost Government and export revenues,
spur economic growth and expand regional prosperity.
Given that the Regions mining potential, attracting FDI interest to the
sector is not a problem, although fulfilling its potential will take time. In
2013, the Philippines Government, for instance, valued the countrys
mineral deposits at around US$850 billion. However, investments and
mining output have slowed in the last three years, as inconsistent policies
and tax uncertainties have deterred investors. The latter also argue that
since they often have to contribute to infrastructure such as power
supplies and roads to serve mining sites, their investments deserve higher
returns. (Reuters)
According to Ong Keng Yong, Singapores High Commissioner to

Malaysia and former ASEAN Secretary-General, the centrepiece of ASEAN
minerals cooperation is a strategic Public Private Partnership (PPP) within
the framework of sustainable development.
In Indonesia, the Government wants to create added value to mining

activities by retaining more of the benefits of the countrys mineral
resources through investment in smelters and refineries to carry out
onshore processing of minerals.
MINING
Natural resources can help economies expand and to

develop in a sustainable way, benefiting local
communities as well as national exchequers and the
companies involved.
Foreign investors in Indonesias mining are also required to divest at
least 20% and 51% of their stakes respectively by the fifth and
twentieth years of a mines production. The divestment schedule is
applicable to all.
Finance Minister, Cesar V Purisima says, the Government wants to

organise the industry in the same way as advanced countries such as
Canada, where plans exist from inception, on how to mitigate
environmental damage caused by mining ventures.
Canadas Fraser Institutes annual survey of mining companies, shows

that at present global mining company interest is low in Indonesia, the
Philippines and Vietnam. Difficulties for foreign companies include
uncertainty over the administration, interpretation and enforcement of
policy as well as over environmental regulations.
Civil society groups that are campaigning for environmental

protection must be engaged in a constructive way. I believe ASEAN
mining companies can fully embrace corporate social responsibility
and become trend setters and model corporate citizens in
environmentally sustainable mining and the rehabilitation of land they
exploit, he says.
The surveys conclusions mirror those of a PricewaterhouseCoopers

(PwC) report which states that perceptions of Indonesias regulatory
environment for the mining sector remain a key challenge for
potential investors.
It is not just a business equation. Local communities also have
concerns. There is a need to address the perception that marked the
mining industrys development over the years, due to such issues as
perceived damage to river systems and farmlands from mine tailings
and waste, displacement of people and dislocation of indigenous
peoples, as well as the environmental impact of open-pit mining
methods. The public awareness campaigns and activities of the ASEAN
Federation of Mining Associations should help redress the balance,
Ong Keng Yong believes.
If governed well, natural resources can help economies expand and

to develop in a sustainable way, benefiting local communities as well
as national exchequers and the companies involved. In this,
meaningful attention to human rights and to environmental
questions is essential.
There are many challenges ahead but interest in mine ventures
remains strong. A PwC survey of companies active in Indonesias
mining sector carried out in 2013, found that 77% had not considered
withdrawing from the country in spite of uncertainties, though only
32% were satisfied with current returns on investment. However, a
clear majority of those surveyed, 65%, thought that there would be
significant improvements over the next five to ten years.
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Agriculture is ready to meet its challenges

The Regions economic expansion has seen development of oil & gas
resources, mining and the growth of manufacturing industries and
service activities. This development over the last 20 years has helped
raise millions of people to middle class status.
The consequences are that while millions have been lifted out of
poverty, elsewhere a third of the Regions population still lives on little
more than US$2 a day, which presents a massive economic and social
challenge for Governments in the Region.
However, it is farming, a far more traditional sector, that continues to be

the most vital focus for ASEAN members, most of whose populations
continue to rely on agriculture for their livelihoods. Despite the rise of
new industries in a region becoming more urbanised, most people
continue to live in rural areas, rising to 80% in the case of Lao PDR.
Another factor increasing the pressure to grow more food is population

growth. The number of people living in the Region is projected to reach
800 million by 2050, a third higher than at present, according to Gil
Saguiguit, Director of the Southeast Asia Ministers of Education
Organisation (SEAMEO), the Regional Centre for Graduate Study and
Research in Agriculture.
In 2013, the agricultural sector contributed 14.3% of Indonesias GDP,

38% in Myanmar, 48% in Vietnam, 34% in Cambodia, 24.8% in Lao
PDR and 11.2% in Malaysia and the Philippines respectively. (CIA World
Factbook 2013)
The sectors output derives almost entirely from smallholdings which
dominate the Regions agricultural landscape. Many farms occupy less
than two hectares and have low access to technology, information,
finance and crucially to markets. The problem is that poor techniques
and low grade inputs, including seeds, lowers productivity while farmers
struggling to survive are driven to over cultivate their land and deplete
scarce water resources as a result. (Philippine Star/World Economic
Forum on East Asia 21/5/14)
102
Population expansion and changing food consumption patterns,

together with growing demand for dairy and meat products, is making
food security a primary challenge for Southeast Asia. The situation is
compounded by concerns over water resources and the effects of
catastrophic weather events such as the typhoon that struck the
Philippines with full force in 2013.
Indonesia, Malaysia and Thailand could be most affected by greater
demand for animal protein products as well as wheat, since they are the
main importers in the Region of staples such as grain, corn and soybean,
according to Belinda Chng, Research Fellow at Singapores Nanyang
Technological University.
AGRICULTURE
In several areas, the productivity of farming communities cultivating

major commodities such as food grains and vegetables is low. However,
there is considerable scope for improving yields, as a result of better
growing methods and reducing waste and post harvest losses resulting
from poor storage, as well as bringing produce to markets in more
timely ways.
Nandu Nandkishore, Nestles Executive Vice President for Asia, also
believes that low rates of land ownership deprive farmers of the
capacity to invest in necessary materials, such as plant protection agents,
or fertilisers which limit farmers earnings.
New methods of cultivation though, are proving successful. In
Indonesias rice partnership, a first trial has resulted in 17% higher yields
for farmers participating and at the same reduced their use of water by
20%. The programme is to be extended to reach up to five million
Indonesian farmers by 2020.
Another project aimed to increase production of coffee, led by Vietnams
Ministry of Agriculture and Rural Development, has brought together
companies such as Nestle, Yara and Syngenta as well as Non
Governmental Organisations (NGO) and research agencies. The
initiative has helped farmers to increase yields by 10% and profits by
14%, also reducing water usage by 40% and greenhouse emissions by
54%. The Government is now seeking to replicate the programme in
additional areas of the country.
Affordable microfinance schemes and crop insurance schemes would
go a long way towards alleviating the difficulties that small farmers
experience. Investing in education is another key element of any
strategy, since training in good agricultural practices will significantly

increase the productivity of a farm and the quality of its produce,
Nadkishore says.
The World Economic Forum (WEF) in collaboration with ASEAN, has
launched an initiative known as Grow Asia, focusing on smallholder
farmer development and environmental agricultural sustainability.
The programme is part of the WEFs New Vision for Agriculture Initiative,
which is seeking to bring together both private and public sectors, to
work on market based solutions to the development of inclusive and
sustainable farming in the Region.
One of the aims is to increase agricultural productivity and profitability
while also reducing detrimental environmental effects in cultivation.
Other areas of focus are inefficiencies in supply chains, access to finance
by farmers and encouraging the use of technology and attracting
investors to the sector.
103
In Indonesia, the Agriculture Ministry has instructed

farming advisors, paid by the Government to assist
farmers with modern techniques, to bring forward the
planting of selected crops.
National level strategies are no longer seen as sufficient to tackle the
immense food security challenge. ASEAN is in an increasingly influential
position to develop and implement region wide responses to these
problems. These efforts are being conducted through bodies such as
ASEAN Integrated Food Security Framework (AIFS), and the ASEAN
Multi-Sector Framework on Climate Change: Agriculture Fisheries and
Forestry Towards Food Security (AFCC), among others.
AIFS, for example, is designed to integrate programmes which stabilise
national and regional food prices and supplies, as well as providing
improved and updated mechanisms which quickly help member
countries to cope with food emergencies. (New Straits Times 21/10/13)
In 2013, the ASEAN Food and Beverage Alliance (AFBA) was also
launched to help harmonise food policy and standards to enhance the
trade of safe, high quality food across the Region. A lack of consistency
in food standards between countries poses a significant technical barrier
to trade. ASEAN food and agricultural exports are much lower than they
could be with the food element in the Regions total exports accounting
for just 3.6% and, of these cross-border sales, just 15% are within ASEAN
countries. (Food Industry Asia)
Rice is the most important crop in the Region and where the need for
regional cooperation is most important. According to research carried
out by the World Bank, despite the importance of the commodity as a
basic staple, only 6.5% of global rice production is traded internationally.
104
This makes the commoditys price highly vulnerable to small changes in

supply and demand. The situation is made more complicated since only
three countries export their rice - Thailand, Vietnam and India. If the
trade policies of these three change for any reason, it can lead to
hoarding and speculation in rice importing countries with soaring prices
and dire effects on the poorest people.
Indonesia is the worlds third largest producer of un-milled rice and
Vietnam the fifth largest. Most ASEAN countries consume all of the rice
they produce. Only Vietnam together with Thailand and Myanmar
produce sufficient amounts in the Region to export. All of Indonesias
estimated 2013 production of 72.1 million tonnes was used to feed its
own people. This is insufficient, given the countrys very high
consumption per capita of around 140kg per year. This means it has to
also import about three million tonnes of rice per year mainly from
Vietnam and Thailand. The Philippines and Malaysia are also net
rice importers.
Singapore, which imports more than 90% of its food requirements is
also highly vulnerable to supply disruptions and price rises. This has led
to rice importers being required to maintain two months worth of
reserves of imports in Government warehouses for up to a year. Other
countries such as the Philippines also maintain stockpiles of rice.
Indonesia is seeking to persuade people to eat less of the traditional
grain and consume other crops and is also encouraging improved
AGRICULTURE
methods of cultivation, though this is difficult in a country where

smallholders account for 90% of rice cultivation, with each farm
occupying land averaging less than 0.8 hectares.
The 2008 price crisis illustrated the degree of social unrest which food
insecurity can lead to. This period saw prices of staple grains surge
from US$370 to US$764 and higher over just a few months, causing
poverty levels to increase dramatically. The events led to much greater
regional cooperation to address key issues regarding rice and other
food supplies, in particular the ASEAN Plus Three Emergency Rice
Reserve (APTERR) agreement was concluded.
APTERR maintains a store of some 787,000 tonnes of rice, the
equivalent of two days consumption across the whole of Southeast
Asia and East Asia. Contributions from the ten ASEAN member states
make up 11% of the reserve stock with China, Japan and South Korea
accounting for the rest. Some 5,000 tonnes from the rice reserve was
given to the Philippines in April 2014, for distribution to those suffering
as a result of Typhoon Haiyan.
Climate change is considered a real threat to any region, creating
natural disasters including droughts, typhoons, tsunamis and
cyclones, all of which cause devastation to agricultural production and
uproot farming communities.
The impact will vary in different regions, some places will experience
more droughts and some places more rains and more extreme
weather events. We can guess what some of those impacts may be
and we are already starting to see some of these impacts but others
will only unfold in time, says Lisa Dreier, Senior Director of the World
Economic Forums Food Security and Development Initiatives.
The Regions Governments are currently focused on mitigating the
potential impact of the El Nino weather phenomenon, which
forecasters said could affect climate patterns in 2014.
We are putting in place policy initiatives, water management and
conservation measures and modern and innovative farming and
fishery technologies, to somehow soften the effects of this dry
weather phenomenon, said Philippines Agriculture Secretary,
Proceso Alcala. (Reuters)
In Indonesia, the Agriculture Ministry has instructed farming advisors,
paid by the Government to assist farmers with modern techniques, to
bring forward the planting of selected crops.
Hopefully, with this action, we can still grow crops and minimise the
risk of drought, says Tunggul Iman Panudju, the Ministrys Director of
Land Development. Calendars indicating specific dates for planting
crops are also being disseminated. Indonesian farmers are being
trained to adapt to changing weather patterns and depending on the
province concerned, provided with alternative crops to rice which are
able to cope better with very dry conditions.
We cannot stop climate change but what we can do is develop
solutions to have better agricultural practices that can manage some of
the weather differences and also to have stronger partnerships to be
ready to recover when we do experience these severe weather events
and disruptions, the WEFs Dreier says. (business.inquirer.net 20/5/14)
105
Healthcare offers many

opportunities for the private sector
As primary healthcare provision has increased in recent decades, health
of the ASEAN population has improved considerably. According to the
World Health Organisation (WHO), life expectancy grew in all ASEAN
countries between 1990 and 2012. This reflects the huge progress which
has been made in little more than a generation to improve healthcare,
advancing from caring for the sick, to huge initiatives to prevent illnesses
and diseases.
The improvement is particularly evident in the Regions least developed
countries. Cambodia, for example, has made substantial strides in
improving maternal health and early childcare, and has also proved
successful in HIV/AIDs prevention and treatment. At least 95% of those
infected have access to anti retro viral treatment, a coverage rate that is
among the highest in the developing world, according to the World Bank.
The success of regional health strategies is also illustrated by
confirmation from the WHO in March 2014, that polio has been
eradicated in Southeast Asia.
106
Healthcare advances are also noticeable in Singapore, Malaysia and

Thailand, where results are often comparable with those of the US and
Europe, particularly in the former.
For instance, the number of births attended by skilled health personnel
and immunisation coverage of children for measles is equal if not higher
than in the US and UK. Neo natal mortality rates for these countries are
the lowest and case detection rates for tuberculosis are the highest,
according to a CIMB ASEAN Research Institute report.
ASEAN leaders have identified healthcare as a priority sector for region
wide integration. This means that medical workers will eventually be
allowed to work in any member country via the full implementation of
Mutual Recognition Agreements. These will permit doctors, dentists and
nurses to work in any member country. An ongoing liberalisation
process is also proceeding through ASEANs Framework Agreement on
Services (AFAS) and through the latters Healthcare Services Sectoral
Working Group (HSSWG).
HEALTHCARE
All ASEAN members are seeking to expand and develop healthcare

provision through cooperation with the private sector. Deloitte notes that
the Region already records the highest private health expenditure in the
world. It says that the future of healthcare in the Region seems to be
moving increasingly to greater investment in private sector delivery.
Malaysia may have a low ratio of healthcare expenditure as a percentage
of GDP, but its public healthcare system is one of the best, primarily due
to a well developed co-existing Government and private healthcare
system. A significant amount of coverage and provision is now facilitated
by private healthcare providers. (Edelman PR report)
Indonesias plans are focused on stimulating Public Private Partnerships
(PPP) to develop hospitals and other essential healthcare infrastructure.
Siloam Hospitals, a local company, has said it plans to extend its
portfolio of seven hospitals to 40 by 2017, through new developments
and acquisitions.
In Vietnam, VinMec opened a 500 bed private hospital in Hanoi in 2013.
Another investor, Canadas Triple Eye Infrastructure Corporation, has
proposed a US$225 million 200 bed hospital for development in Hai
Duong Province. The Philippines Chandler Corporation is reported to
have bid US$99 million for an 80% share in Hoan My Hospital
Corporation, the countrys largest hospital group. (Edelman - The State
of Healthcare in Southeast Asia)
The Government is keen to encourage more inward investment into the

sector and is offering foreign healthcare developers corporate tax
exemption rates of 10% over the first four years of a project and 50% in
following years.
In the Philippines, the Government is seeking a PPP route for the
construction of a 700 bed specialist hospital at an estimated cost of
US$135 million. Thailand has plans for a new US$135 million 700 bed
tertiary hospital on a similar basis. The Royal Rattanak Hospital in Phnom
Penh, Cambodias first private hospital offering international standards,
is also financed by Thailands Dusit Medical Services.
107
An expanding middle class in the urban populations

of the larger cities has served to push demand for high
quality healthcare, thereby creating a flourishing
private health sector.
Singapores Healthcare Masterplan, anticipates PPP involvement to
provide 4,100 new hospital beds by 2020, including 1,900 community
care hospital beds, mainly to cater to the ageing populations needs.
Four additional acute hospitals are also planned over the next 15 years.
(Edelman PR Insights)
policies, or pay out-of-pocket for private healthcare expenses. The

Government wants the amount spent to rise to 7% as a percentage of
GDP by 2020, to reach developed country levels. However, with the
Government accounting for 60% of healthcare expenditure, it is keen to
shift more to the private health sector.
Universal healthcare strategy takes shape

In recent years, most countries in the Region have strengthened their
social protection mechanisms and essential health services. Several
innovative financing schemes to help the poor have been implemented.
These include the Healthcare Fund for the Poor in Vietnam, Health
Equity Funds in Cambodia and Lao PDR. Singapore also supplies a
subsidised system for its nationals.
Singapore has the highest per capita spend on healthcare in the Region.
Some 70% to 80% of its citizens access a public health system via
three major public healthcare finance schemes, Medsure, Medshield Life
and Medfund. The Government carries around 30% of healthcare
expenditure for the system, with the rest provided via healthcare
insurance packages.
The Malaysian Government is committed to universal healthcare

provision and public medical services are heavily subsidised. For the
poor, healthcare is free. A majority of Malaysians have private insurance
108
Thailand has had a universal healthcare programme in place since

October 2001. Its Universal Health Coverage Scheme, is widely known
as the 30 Baht scheme, referring to the less than one dollar cost for
low earners.
HEALTHCARE
A national insurance law in the Philippines, provides that all citizens,

regardless of social and economic status, shall be covered by
national health insurance protection via the Philippine Health
Insurance Corporation.
In Malaysia, the Malaysia Healthcare Council, a Government Agency,

has been set up to develop the healthcare travel industry. One result
is that the country operates a green lane at its airports to facilitate
easier travel for medical tourists.
Under Indonesia's National Social Security System (Sistem Jaminan

Sosial Nasional), which became law in January 2014, all employees
and residents are intended to be covered under a single healthcare
system by 2019, and will pay into a National Health Insurance Agency
(Badan Penyelenggara Jaminan Sosial). The poor and disabled will
have their contributions paid for by the Government. (Jakarta Post
31/12/13 and 2/1/14)
Thailands medical tourism market leader is Bumrungrad Hospital in

Bangkok. The majority of the latters staff have board certification from
the US, Japan and Europe. The hospital maintains offices in most
ASEAN countries as well as in the Middle East and Australia, catering to
more than one million patients a year, 420,000 of whom are foreigners.
Medical tourism sector continues to expand

The more affluent in Southeast Asia are accustomed to seeking
medical treatments outside their own countries, especially for
specialist procedures. Industry analysts, Frost and Sullivan, estimate
that Indonesians spend more than US$1 billion a year on medical
treatments overseas. (Independent Market research on the Global
Healthcare Services Industry, 2012)
An expanding middle class in the urban populations of the larger cities
has served to push demand for high quality healthcare, thereby
creating a flourishing private health sector. Market forces have turned
many aspects of healthcare into a new industry in countries such as
Singapore, Malaysia and Thailand.
Other prominent Thai hospitals with a significant foreign clientele

include the Phyathai, Samitivej Sukhumvit and Dusit hospitals in
Bangkok. (IHE-online.com)
Singapore is also a globally renowned medical tourism hub and also a
centre of excellence in oncology. Such high level specialist medical
facilities account for a very high spending level per patient. Health
tourism expenditure is estimated to have been more than US$800
million in 2011, of which nearly half derived from Indonesia. (Edelman
PR report)
Other operators of private clinics and hospitals in the Region also want
to attract foreign patients. The Philippines aims for 200,000 foreign
patients a year to its recently accredited 44 hospitals and health facilities
for health tourism. Cambodia and Vietnam are also believed to be very
interested in finding their own niche in the medical tourism area.
109
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EDUCATION
Educational development is
a key economic strategy
The potential rewards of a single market within the ASEAN Region are
attractive, with the promise of even greater and faster economic
expansion. Governments recognise that to be competitive with other
trading blocs, it will depend on ASEAN providing workforces with
the necessary skills needed for businesses and industries in a
globalised economy.
Education is proving the key to successful adaptation to changing market
requirements. This is illustrated by Vietnams experience, where
educational improvements have played an important role in making the
country a development success story over the last two decades.
A committed effort to promote access to primary education for all and
to ensure its quality, through centrally setting minimum quality
standards has contributed, for example, to Vietnams reputation for
having a well educated, young workforce. Sound literacy and numeracy
attainment among adult workers is widespread and more so than in
other countries, including wealthier ones, the World Bank says.
This has allowed a rapid shift of employment out of low productivity
agriculture, into higher productivity non-farm jobs. In the World Banks
latest Knowledge Economy Index, which seeks to measure a countrys
capacity for generating and diffusing knowledge and applying it for
economic development, Vietnam has jumped nine places.
An availability of personnel capable of training, is helping to attract

international technology based industries in Vietnam. The Ministry of
Science and Technology is now trying to develop a high tech cluster of
Small to Medium Enterprises (SMEs). The move is already showing
some success, with the decision made by almost 80 Japanese ICT
firms to invest in the country in 2013. (Centre for Economics and
Business Research)
The Knowledge Index (KI) lists Singapore as occupying first place in
Southeast Asia followed by Malaysia, Thailand, Philippines, Vietnam,
Indonesia, Lao PDR, Cambodia and Myanmar.
According to the World Bank, development of higher education in low
and middle income Southeast Asian countries has the potential to
dramatically lift productivity and competitiveness by providing the high
level skills and research necessary for innovation and growth. UNESCO
also states that those developing countries that have progressed fastest
in recent years are the ones that have adopted policies to promote
science, technology and innovation. (World Bank 2012/UNESCO
Science Report 2010)
Higher education can only be developed if earlier educational stages
are sound. The Region has been successful in building the required
foundations. According to the ASEAN State of Education Report for
111
2013, youth literacy rates have improved remarkably. It states that on

average, more than 90% of the Regions population can read and write,
while net school enrolment rates increased between 2000 and 2011 in
all member countries. Drop out rates also declined rapidly over the
same period. Advances in gender parity in primary and secondary
education are also recorded.
The focus on educational development beyond secondary school is
particularly important, in order that countries avoid being caught in what
economists call the middle income trap. This expression is used to
describe where a country attains a certain income but can only remain
at that level. Those caught in the trap occupy predominantly lower, value
added niches of manufacturing such as assembly and processing.
As Southeast Asia becomes increasingly connected to advanced global
knowledge based economies, it has to increasingly create a class of
highly educated professionals to compete with foreign workers in those
high end sectors.
Malaysias Government is committed to transforming its educational
system over the next 15 years. Our goal, and the purpose of the
education system, is to equip our students holistically to allow them to
succeed in the 21st Century, says Deputy Prime Minister and Minister
of Education, Tan Sri Muhyiddin Yassin.
The reforms aim at raising teaching standards in the classroom for core
subjects. These include English, Maths and Sciences alongside Malay, the
local language.
Higher entry levels for teachers are also called for, as well as greater
private sector collaboration and more parental involvement. The
programme also emphasises not just improved salaries but professional
development through teacher training. More ICT is to be introduced for
distance and self paced learning programmes.
One of the principal reforms will see new secondary and revised primary
curricula delivered to international benchmarks by 2020. Ultimately, the
112
objective is to see Malaysias education system placed among the top

third in the world. This will see greater school based management and
autonomy around curricula implementation and a culture whereby
teachers share best practices and hold peers accountable for meeting
professional standards, the Ministry of Education says.
Indonesias labour force is rapidly becoming more educated. Most of
the expansion of the labour force over the past decade has been in
senior secondary and tertiary education graduates, according to a 2014
World Bank assessment. (Indonesia Development Policy Review 2014)
Access for the countrys poor to education has also increased
dramatically with children from poorer families enrolling earlier and
staying in school longer. The constitution demands that at least 20% of
the total Government budget is committed to education, which has led
EDUCATION
It will be the countries displaying higher levels

of education and those able to push the
technological frontiers of the future that will reap
the economic benefits.
to a more than doubling of spending in real terms on education since
2002, the World Bank notes.
While the majority of the population has completed basic
education, there are now more than 30 million senior secondary
graduates and more than ten million tertiary education graduates in
Indonesias workforce.
There are also moves to extend the development of English language
skills lacking in a country which was colonised by the Dutch. Binus
University in Jakarta, is aiming to teach 60% of its courses in English
by 2020, according to the universitys Director of Internationalisation,
Lily Manoharan. The university, founded in the 1970s, specialises in
computing, maths and science courses.
The Philippines, with its pool of English speaking workers, vies with
India as the worlds largest business process outsourcing industry, that
has developed from call centres to provide a range of back office
support services, engineering design and software development.
Myanmar also has the advantage of English as a primary language.
There is a growing focus on education development in the country,
where the education budget is due to be increased from 5.43% to

5.92% over 2014 and into 2015. This is likely to grow further in future
years. An education sector review, described by USAID as remarkably
frank and comprehensive, is underway to help inform educational
policy reform in the country.
There is an interest to reform academia and establish greater
international connections, driven in part, by a desire to reclaim the
historical high standing of Myanmars educational system. Yangon
University was once considered to be one of the jewels of higher
education in the ASEAN Region. USAID notes that a hunger for
external information and technical support is evident everywhere and
at all levels of institutional and civil society hierarchies. (Investing in the
Future: Rebuilding Higher Education in Myanmar)
It will be the countries displaying higher levels of education and those
able to push the technological frontiers of the future that will reap the
economic benefits. ASEANs rich reserves of highly skilled workers will
spur the introduction of new and advanced technologies for producing
high value goods. This can place ASEAN countries at the hub of
innovation and industrial growth in global markets.
113
Tourism is Southeast Asias fastest growing sector
114
More people are travelling than ever before with just over one billion
tourists recorded worldwide in 2013, by the UN World Travel
Organisation (UNWTO). As in 2012, the ASEAN Region has again
featured as the fastest growing globally, with a 10.8% increase in
international tourist arrivals, a reflection of buoyant intra-regional
demand, according to them.
As a result, the travel and tourism industry is seen as crucially important

for development. Malaysian Prime Minister, Najib Razak, addressing the
seventeenth ASEAN Tourism Forum (ATF) in January 2014, declared that
tourism is vital for the socio-economic benefits as it promotes people to
people connectivity, one of the key strategies towards achieving the
ASEAN Community by 2015.
The travel sector is helped by growing connectivity in the Region which

is helping to stimulate tourism. In 2004, ASEAN Transport Ministers,
drafted a ten year plan under which the Region's air travel would be
progressively integrated and liberalised. More competition in the skies
has helped in turn to reduce prices and provide more direct flights
between countries. (Straits Times 28/2/14)
Industry trends continue to be encouraging. The UNWTO, which bases

its forecasts on feedback from industry experts around the world,
believes that growth will continue during 2014, to reach 4.5%
worldwide. This would exceed the long term forecast of 3.8% between
2010 and 2020, that the organisation has previously predicted.
(www.travelpulse.com)
TOURISM
ASEAN attracted 90 million visitors in 2013, an increase of 12% from

2012. This is a precursor to what lies ahead for the Region: a robust
tourism economy. It is human capital that is at the core of this
sustainable success, says Peter Semone, Chief Technical Advisor for the
Lao National Institute of Tourism and Hospitality.
Data from 2014 illustrates just how important tourism has become.
UNWTO statistics for 2013, reveal Brunei Darussalam received 225,000
international visitors, up 7.6% on the previous year. Cambodia up 3.6%
to 4.2 million, Indonesia up 8% to 8.8 million, Philippines up 9.7% to 4.7
million visitors, Vietnam up 10.6% to 7.6 million and Thailand up 18.7%
to 26.5 million.
Thailand, Malaysia and Singapore are recipients of the largest number of
visitors in the Region. The latter two countries have seen international
arrivals numbering around 25 million and 11 million respectively, for
each of the last two years. The biggest jump in visitors has been
experienced by Myanmar from 593,000 in 2012, to 900,000 in 2013, a
more than 51.7% jump. (UN World Travel Organisation Tourism
Highlights 2014)
Income received from international tourism at an estimated US$21
billion for Malaysia in 2013, US$18.9 billion for Singapore, US$9.3 billion
for Indonesia, US$7.5 billion for Vietnam, US$4.7 billion for the
Philippines, US$2.7 billion for Cambodia and a huge US$42 billion for
Thailand. This places Thailand among the top ten countries in the world
for international arrivals and for earnings from its tourist industry.
The accelerating development of the tourism sector is focusing the
attention of governments. Member countries are keen to help tourism
by developing a free flow of services and trained personnel. At ATF in
Kuching, Malaysias Tourism and Culture Minister, Mohammed Nazri

Abdel Aziz, said that he and his counterparts within ASEAN are
determined to press ahead with building the sectors capacity to sustain
its growth.
They also want to improve skills by implementing a Mutual Recognition
Arrangement (MRA) of qualifications for those working in the hospitality
sector. A regional secretariat is being set up in Indonesia to facilitate the
introduction of the MRA. The move includes setting up an ASEAN
Tourism Qualifications Equivalent Matrix to serve as a key reference for
the tourism industry and associated training institutions, as well as an
ASEAN Tourism Professional Registration System.
115
Developing new visitor attractions and marketing these

to an international audience is vital if the benefits of
tourism development are to be more evenly spread
within the Region.
Another priority is to develop a strategic plan for eco-tourism. This aims
at promoting sustainable economic development through conservation
of nature based tourism in the Region. ASEAN Tourism Ministers also see
opportunities to attract more of the booming international cruise
business. This follows the establishment of an ASEAN Cruise Work Plan
in 2013, designed to showcase the attractions and ports. Assistance is
also being given by UNWTO to identify opportunities for river based
tourism routes.
Developing new visitor attractions and marketing these to an
international audience is vital if the benefits of tourism development are
to be more evenly spread within the Region and pressure relieved on
traditional and increasingly overcrowded visitor sites. The most visited
cities and resorts are Singapore, Bangkok, Kuala Lumpur, Phuket,
Pattaya, Ho Chi Minh City, Manila, Denpasar, Chiang Mai, Jakarta, Hanoi
and Siem Reap.
116
Cambodias strategy, for example, is to reduce congestion at its most

popular sites such as Angkor Wat in Siem Reap Province, by developing
and promoting other tourism areas in the country. Indonesia also
wants to develop away from Bali to other areas of tourism
development potential.
A central part of ASEAN tourism development strategy is also the
creation of a single entry visa to the ten member countries. The strongest
proponents of this visa are countries such as the Philippines and
Indonesia and these will benefit most according to Philippines Tourism
Secretary, Ramon Jimenez. An arrangement concluded by Cambodia
and Thailand is seen as a precursor to phased introduction. The latter
now allow visas obtained in either country to be valid for both.
Growing investments and cooperative efforts augur well for a continuing
expansion in ASEANs share of world tourism. The positive results in
TOURISM
2013, and the expected global economic improvement in 2014, set the
scene for another positive year for international tourism, says
UNWTO Secretary-General, Taleb Rifai.
The tourism sector has shown a remarkable capacity to adjust to
changing market conditions, fuelling growth and job creation, he
says. The sector has shown considerable resilience in recent times to
health scares, natural disasters, financial crises and political upheavals.
Demand grows for more and better hotels
Myanmar, although it attracted nearly one million international
travellers in 2013, is still one of the least visited countries. Now
firmly embarked on a determined re-engagement with the
international community, the Government is planning for an ever
increasing number of international arrivals, including both tourists
and business visitors.
Both categories are likely to demand similar standards of
accommodation and facilities offered in other, more developed, parts
of the Region.
Until 2013, Myanmar only had six hotels considered to be of an
international five star standard. With Government plans to receive up
to seven million tourists in the next five years, a huge amount of new
infrastructure is required. The shortage of top end accommodation has
attracted interest from a range of international hotel and service
apartment operators. These include the Accor Group, Shangri-La
Group and Pan Pacific Group, all of which have declared plans to enter
the Myanmar hospitality market.
Hilton Worldwide Holdings announced plans in June 2014, to open
more hotels in Myanmar over the next three years. The Hilton
Naypyidaw and Hilton Ngapali Beach Resort in Rakhine State were due
to be opened in Autumn 2014. These are to be followed by the

opening of hotels in Bajan, Mandalay and a resort hotel at Inie Lake in
Shan State. Hilton says it is proceeding with planned projects in
conjunction with the local Eden Group. (11/6/14 Hilton PR)
Vietnams surging tourism industry is also proving attractive to
developers. Rose Rock Group, a US investment company, announced
plans in early 2014, to develop a US$2.5 billion residential and 760
room hotel project on the south central part of the countrys coast at
Vung Bay. In the south at Ho Tram, Canadas Asian Coast
Development is already developing a golf course and casino resort.
(Bloomberg 14/1/14)
The new hotels being developed reflect a trend towards development
of the high end visitor market. Luxury hotel brands including
Worldhotels, and Sofitel are among those planning to expand in
Indonesias islands of Java and Bali, with the opening of 4,000 rooms.
The former opened its first resort property in the country, the
Worldhotel Balangan in 2014. According to the Groups VP for the AsiaPacific region, Roland Jegge, it plans to add 30 more hotels across
Indonesia in the next ten years.
Worldhotels is collaborating with Tauzia Hotel Management in this
expansion. The latters President, Marc Steinmeyer, says there is a
growing demand for luxury accommodation. Tauzia, which operates
18 hotels in Java, Bali and Sumatra, says it is introducing its Preference
brand to cater for high end guests in Java.
Sofitel Asia-Pacifics Senior VP, Markland Blaiklock says: Indonesia is a
key growth market for us and we see immense potential to grow the
brand here. We are looking at opportunities to expand our presence
both in Bali and Jakarta.
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Informing Engaging
COUNTRY REFERENCE
Member country profiles...
119
BRUNEI DARUSSALAM
The Government anticipates that offshore exploration will allow a

substantial increase in future output of crude oil & gas, as global
hydrocarbon prices remain at a high level. Production levels have
recovered in 2014, after shutdowns in major oilfields to carry out essential
maintenance which occurred in 2013. As a result, the economy has
resumed an upward trajectory, with the construction sector expanding
particularly strongly and stimulated by infrastructure developments.
At the same time strong efforts are being made to diversify the
economy by encouraging investment in agriculture, fisheries and
forestry. There are also plans to transform the country into a regional
trading and financial hub. The Brunei Economic Development Board
has instituted an assistance programme to attract investment from both
local and foreign entrepreneurs with innovative ideas that will help
diversification. There are also substantial prospects for developing the
Sultanates tourism industry.
Located on the northern shore of the island of Borneo, Brunei
Darussalam consists of two unconnected parts, with a total area of
5,765km2 and occupies only 1% of Borneos land area. It is bound on
all sides by the Malaysian State of Sarawak. To the north there is a
161km long stretch of coastline next to the South China Sea. The island
is also shared with the Indonesian provinces of West, South, East and
Central Kalimantan.
Of the total population in Brunei, around 140,000 live in the capital
Bandar Seri Begawan. Other major towns are the port of Muara, the oil
producing Seria and its neighbouring Kuala Belait. The Panaga area is
home to a large expatriate community due to Brunei Shell Petroleum
120
housing and facilities. The majority of the population live in the eastern
part of Brunei, while the remainder live in the mountainous
southeastern region, in the district of Temburong. Most of Brunei is
within the Borneo lowland rainforest eco-region, which covers the
majority of the island. There are also areas of mountain rainforest inland.
Culture is deeply connected to religion, with the family being the focal
point of the social structure. Islam is the primary religion. The monarchy
provides a royal heritage with a direct family line going back to 1405, and
this is the only Malay Islamic Monarchy in the world.
Bandar Seri Begawan is Bruneis centre of commerce, finance and
government. One of the citys most prominent features is the Sultan Ali
Saifuddien Mosque, a tribute and indication of the nations deep rooted
Islamic faith.
Brunei joined ASEAN on 7 January 1984, becoming the sixth member
and hosted the ASEAN Regional Forum in July 2002.
Joined ASEAN:
7 January 1984
Head of State:
His Majesty Sultan Haji Hassanal Bolkiah Muizzaddin Waddaulah
Area:
5,765 km2
Border countries:
Malaysia
Coastline:
161km
Capital city:
Bandar Seri Begawan
Total population:
415,717
Population of capital:
140,000
Climate:
Tropical, hot, humid and rainy
Languages:
Malay, English, Chinese
Religions:
Muslim 67%, Buddhist 13%, Christian 10%, other 10%
Ethnic groups:
Malay 66.3%, Chinese 11.2%, indigenous groups 3.4%, other 19.1%
Monetary unit:
Brunei Dollar (BND)
Natural resources:
Petroleum, natural gas, timber
Major exports:
Crude oil, natural gas, garments
COUNTRY REFERENCE
BRUNEI DARUSSALAM
Major export trading countries: Japan 45%, South Korea 15%, Australia 7.4%, India 7.3%, New Zealand 6.5%
Major imports:
Machinery and transport equipment, manufactured goods, food, chemicals
Major import trading countries:UK 27%, Singapore 17%, Malaysia 15%, China 11%, Japan 5.8%
Internet domain:
.bn
International dialling code:
+673
Sources: CIA 2013 World Factbook | World Bank
121
CAMBODIA
Sap (Great Lake) and the upper reaches of the Mekong River Delta.
Extending outwards from this central region are transitional plains,
thinly forested and rising to elevations of about 200m above sea level.
Driven by the countrys garment manufacturing industry, construction,

agriculture and its fast developing tourism sector, Cambodias economy
is displaying robust growth with GDP increasing by 7.5% in 2013. The
garment sector, which produces clothing for many of the worlds leading
brands, employs around 400,000 people and accounts for some 70% of
total exports. Cambodia is also an increasingly popular tourist
destination. Its world heritage sites have established the country on the
tourism map and attract some three million visitors a year. Cambodias
export base has the potential of being expanded if offshore oil deposits
are exploited and ventures to mine iron, bauxite, gold and gemstone
deposits are pursued. The Economist Intelligence Unit forecasts that
GDP growth of 7.4% will be achieved in 2014.
122
The Mekong River flows south through the countrys eastern regions.
To the east of the Mekong there is a region of forested mountains
and high plateaus, which extend into Lao PDR and Vietnam. In
southwestern Cambodia, there are two distinct upland areas, the
Kravanh Mountains and the Damrei Mountains. The southern coastal
region adjoining the Gulf of Thailand, is a narrow lowland strip, heavily
wooded and sparsely populated, which is isolated from the central
plain by the southwestern highlands.
The Mekong River provides fertile, irrigated fields for rice production.
Exports of clothing generate most of Cambodias foreign exchange but
tourism is also an important part of the economy.
Cambodia received 2.8 million visitors in 2011, many visiting the Angkor
temples in Siem Reap Province, built between the ninth and 13th
centuries. The beaches in Sihanoukville in the southeast and the capital
Phnom Penh, are the principal visitor attractions. Other attractions
include the area around Kampot and Kep, with the Bokor Hill Station.
Cambodia is located in the southern portion of the Indochina Peninsula.

It is bordered by Thailand to the northwest, Lao PDR to the northeast,
Vietnam to the east and the Gulf of Thailand to the southwest.
Buddhism is the main religion and this creates an identity and a

behaviour pattern for each person. This also enforces a sense of
hierarchy within society. Cambodia is a collective society. This places
emphasis on groups rather than the individual.
Cambodias landscape is characterised by a low lying central plain, which

is surrounded by uplands and low mountains and includes the Tonle
Cambodia joined ASEAN on 30 April 1999, making them the

tenth member.
Joined ASEAN:
30 April 1999
Head of State:
His Majesty King Norodom Sihamoni
Area:
181,035km2
Border countries:
Lao PDR, Thailand, Vietnam
Coastline:
443km
Capital city:
Phnom Penh
Total population:
15.14 million
1,519,000
Climate:
Tropical and humid. Monsoon season May to November. Dry season December to April.
Languages:
Khmer, French, English
Religions:
Buddhist 96.4%, Muslim 2.1%, other 1.3%, unspecified 0.2%
Ethnic groups:
Khmer 90%, Vietnamese 5%, Chinese 1%, other 4%
Monetary unit:
Riel (KHR)
Natural resources:
Oil & gas, timber, gemstones, iron ore, manganese, phosphates, hydropower potential
Major exports:
Clothing, timber, rubber, rice, fish, tobacco, footwear
COUNTRY REFERENCE
CAMBODIA
Main export trading countries: US 28%, Hong Kong 14%, UK 7.9%, Germany 7.9%, Canada 5.2%.
Major imports:
Petroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products
Main import trading countries: China 25%, Thailand 22%, Vietnam 17%, South Korea 5.5%, Hong Kong 5.4%.
Internet domain:
.kh
+855
123
INDONESIA
Indonesia has embarked on a change of political direction, with the

election of Joko Widodo, Governor of the capital Jakarta, in July, 2014.
He takes the helm of a vast country stretching across an archipelago of
more than 18,000 islands, stretching from Asia to Australia. The
economy needs to continue to develop rapidly in order to support a
population approaching 250 million people, the fourth largest in the
world after China, India and the US. Indonesias economy has
expanded substantially since the late 1990s and the country is an
established member of the G20 group of leading world economies.
Indonesia consists of over 18,000 islands, about 6,000 of which are
inhabited. These are scattered over both sides of the equator. The
largest are Java, Sumatra and Borneo, shared with Brunei and Malaysia,
New Guinea, shared with Papua New Guinea and Sulawesi. The capital,
Jakarta, is on Java and is the nation's largest city, followed by Surabaya,
Bandung, Medan and Semarang.
Indonesia is the most populated of ASEANs ten nations and is the
world's 16th largest country in terms of land area, with Java being the
world's most populous island. At 4,884m, Puncak Java in Papua is
Indonesia's highest peak and Lake Toba in Sumatra its largest lake, with
an area of 1,145km2. The country's largest rivers are in Kalimantan and
include the Mahakam and Barito.
124
Indonesia has at least 150 active volcanoes, including Krakatoa and

Tambora. Volcanic ash is a major contributor to the vast agricultural
fertility that has historically sustained the high population densities of
Java and Bali.
Although the main tourist attraction is Bali, many of the countrys best
beaches are located on the less known Toglan Islands off the coast of
central Sulawesi, Karimunjawa in the Java Sea and the Banda Islands in
Maluku Province. Other popular tourist attractions include the temples
of Borobudur, the tropical rainforest of Sumatra, the mountainous
Lorenze National Park in Papua and West Nusa, home to the Komodo
Dragon. Indonesias eastern most province of Papua contains 1,500
islands and west of Papua lies the Maluku archipelago, once known as
the Spice Islands.
Indonesia is perhaps the most culturally diverse of the ASEAN states.
There are over 300 ethnic groups in Indonesia. Due to this diverse
nature, there is a strong pull towards each persons ethnic group or
place of birth or family. The national motto is Unity in Diversity.
Indonesia is a founding member of ASEAN and a member of the G-20
major economies.
Joined ASEAN:
8 August 1967 (Founder Member)
Head of State:
President Joko Widodo
Area:
1,904.569km2
Border countries:
Timor-Leste, Malaysia, Papua New Guinea
Coastline:
54,716km
Capital city:
Jakarta
Total population:
249.9 million
9,121,000
Climate:
Tropical, hot and humid. More moderate in the highlands
Languages:
Bahasa Indonesia, English, Dutch, local dialects (of which most widely spoken is Javanese)
Religions:
Muslim 86.1%, Protestant 5.7%, Roman Catholic 3%, Hindu 1.8%, other 3.4%
Ethnic groups:
Javanese 40.6%, Sundanese 15%, Madurese 3.3%, Minangkabau 2.7%, Betawi 2.4%, Bugis 2.4%, Banten 2%,
Banjar 1.7%, other 29.9%
Monetary unit:
Rupiah (IDR)
Natural resources:
Petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, gold, silver, coal
Major exports:
Oil & gas, coal, electrical appliances, plywood, textiles, rubber
COUNTRY REFERENCE
INDONESIA
Main export trading countries: Japan 15%, China 12%, Singapore 9.1%, US 8.4%, South Korea 7.2%.
Major imports:
Machinery and equipment, chemicals, fuels, foodstuff
Main import trading countries: China 16%, Singapore 14%, Japan 11%, South Korea 6.9%, Malaysia 6.1%.
Internet domain:
.id
+62
125
LAO PDR
Lao PDR recorded the strongest GDP growth of an ASEAN economy in

2013, according to World Bank data. Development of the countrys
natural resources has helped it achieve consistently high economic
returns for the last decade. The communist state has moved to
gradually introduce business reforms since 2005, and it opened a stock
market in the capital, Vientiane, in 2011, as part of a tentative step
towards a market economy.
The mountainous landlocked country, which borders Thailand, Vietnam,
Cambodia, China and Myanmar, has an abundance of water, forests and
mineral resources. In particular, hydropower, timber, gold and copper
contribute increasing amounts of GDP and export revenues. USAID says
that by some estimates, hydropower and mining will contribute 25% of
Lao PDRs GDP by 2020. A significant upgrade to infrastructure will also
result if discussions to build a high speed railway link to China move
forward to implementation.
Lao PDR has a thickly forested landscape and consists mostly of rugged
mountains, the highest of which is Phou Bia at 2,818m, with a number
of plains and plateaus. The Mekong River forms a large part of the
western boundary with Thailand, whereas the mountains of the
Annamite Chain form most of the eastern border with Vietnam.
Dong Hua Sao, at the southern end of the country prevents access to
the sea but cargo boats travel along the entire length of the Mekong in
Lao PDR during most of the year. Smaller power boats and pirogues
provide an important means of transportation on many of the
tributaries of the Mekong.
Vientiane, located on the curve of the Mekong River, has French
inspired architecture, its a vibrant city and popular tourist destination.
Other large cities include Luang Prabang, Savannakhet and Pakse.
126
Buddhism is the religion of 67% of the population. The people are

influenced largely by Buddhist teachings and this is reflected in the
culture. Lao PDR is so far, untouched by the modern demands and
pace of life. Collectivism is also a strong part of its culture. There are 65
ethnic minorities, each with their own language, making individualism
also possible.
Lao PDR joined ASEAN on 23 July 1997, along with Myanmar.
Joined ASEAN:
23 July 1997
Head of State:
President Choummaly Sayasone
Area:
236,800km2
Border countries:
Myanmar, Cambodia, Thailand, Vietnam, China
Coastline:
Landlocked
Capital city:
Vientiane
Total population:
6.47 million
799,000
Climate:
Tropical. Monsoon season May to November. Dry season December to April
Languages:
Lao PDR, French, English, various ethnic languages
Religions:
Buddhist 67%, Christian 1.5%, other 31.5%
Ethnic groups:
Lao PDR 55%, Khmou 11%, Hmong 8%, other 26%
Monetary unit:
Kip (LAK)
Natural resources:
Timber, hydropower, gypsum, tin, gold, gemstones
Major exports:
Wood products, coffee, electricity, tin, copper, gold
COUNTRY REFERENCE
LAO PDR
Main export trading countries: China 35%, Thailand 31%, India 6.3%, Japan 5.6%, UK 4.8%.
Major imports:
Machinery and equipment, vehicles, fuel, consumer goods
Main import trading countries: Thailand 48%, China 25%, Vietnam 6.9%, South Korea 4.6%, Germany 4.2%.
Internet domain:
.la
+856
127
MALAYSIA
Malaysias GDP grew 4.7% in 2013. The country has progressed from
being a producer mainly of raw materials, such as tin and rubber, to a
diversified economy and a leading exporter of electronics, electrical parts
and components, as well as natural gas and palm oil. Malaysias New
Economic Model launched in 2010, is ongoing and aims for the country
to reach high income status by 2020. The plan includes a number of
reforms to achieve growth which is intended to be primarily driven by
the private sector and to move the economy into higher value added
activities in both industry and services. The World Bank says that this
strategy hinges on structural reforms. The accelerated implementation of
productivity enhancing reforms to boost education and training and
competition will be the key to long term growth and to secure the
countrys passage to the ranks of high income economies.
Malaysia consists of two regions separated by 1,030km of the South
China Sea - West Malaysia, in the southern third of the Malay Peninsula
and East Malaysia on the northern quarter of the island of Borneo,
with its Provinces of Sarawak and Sabah. West Malaysia is bound by
Thailand to the north, the South China Sea to the east, Singapore to the
south and the Strait of Malacca to the west. East Malaysia is bound by
128
Indonesia to the south, the South China Sea to the west and north and
the Sulu Sea to the northeast. West Malaysia consists of a range of steep
forest covered mountains, with coastal plains to the east and west and
the principal river is the Pahang. East Malaysia has a broad swampy
coastal plain, which rises to jungle covered hills in the interior.
As well as its status as a leading business destination, Malaysia offers
beautiful scenery and a huge variety of tourist attractions, from beaches
to dense rainforests.
Leading destinations include the Pulau Payar Marine Park at Langkawi,
the Gunung Mulu National Park in Sarawak and Sipadan Island in
Sabahand Penangs Georgetown, a UNESCO World Heritage site.
Malaysia is a multi-cultural society. The main cultural groups are the
native Malays, together with groups of Chinese and Indian ethnicity.
Individual lifestyles are maintained. Families tend to socialise within their
own ethnic groups but the desire to conform socially, makes Malaysians
strive for harmonious relationships in every aspect of their lives.
Malaysia is a founding member of ASEAN.
Joined ASEAN:
Head of State:
Sultan Abdul Halim Muadzam Shah
Area:
329,847km2
Border countries:
Brunei Darussalam, Indonesia, Thailand
Coastline:
4,675km
Capital city:
Kuala Lumpur
Total population:
29.72 million
1,493,000
Climate:
Tropical. Southwest monsoons April to October, northeast monsoons October to February
Languages:
Bahasa Malaysia, English, Chinese, Tamil, Telugu, Malayalam, Panjabi, Thai
Religions:
Muslim 60.4%, Buddhist 19.2%, Christian 9.1%, Hindu 6.3%, Confucianism, Taoism and other
Chinese religions 2.6%, other 1.5%
Ethnic groups:
Malay 50.4%, Chinese 23.7%, indigenous 11%, Indian 7.1%, other 7.8%
Monetary unit:
Ringgit (MYR)
Natural resources:
Tin, petroleum, timber, copper, iron ore, natural gas, bauxite
Major exports:
Electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber,
textiles, chemicals
COUNTRY REFERENCE
MALAYSIA
Main export trading countries: Singapore 13.3% Japan 12%, China 12%, US 7.3%, Thailand 5.1%.
Major imports:
Electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, chemicals
Main import trading countries: China 16%, Singapore 14%, Japan 9.3%, Indonesia 6.1%, Thailand 5.4%.
Internet domain:
.my
+60
129
MYANMAR
According to World Bank estimates, Myanmars economy grew by 7.3% in

2013. A transition process is underway that is intended to lead from an
authoritarian administration to democratic governance, and from a
centrally directed economy to a market led system. These significant
changes in direction have the potential to create opportunities and a more
broadly distributed prosperity for the countrys people, allowing Myanmar
to resume its place as one of the most dynamic economies in Asia.
The country has one of the lowest population densities in the Region,
with fertile lands and untapped agricultural potential in addition to huge
unexploited natural resources. Its geographic location connecting China
and India, two of the worlds most dynamic economies, makes Myanmar
well positioned to resume its traditional role as a trading hub and major
supplier of minerals, gas and agricultural produce. Developing the
private sector and stimulating FDI is also a priority. In addition, essential
infrastructure improvements are underway, beginning with the
introduction of a national cellular telecoms network.
Myanmar, the second largest country in Southeast Asia, is bordered by
China on the northeast, Lao PDR on the east, Thailand on the southeast,
Bangladesh on the west, India on the northwest and the Bay of Bengal to
the southwest, with the Andaman Sea defining its southern periphery.
In the north, the Shan mountains form the border with China. Hkakabo
Razi, located in Kachin State, at an elevation of 5,881m, is the highest
point in Myanmar. Three mountain ranges, namely the Rakhine Yoma,
the Bago Yoma and the Shan Plateau, divide three river systems, the
Salween, the Sittaung and the Irrawaddy, the longest at nearly 2,170km,
which flows into the Gulf of Martaban.
Much of the country lies between the Tropic of Cancer and the Equator.
It lies in the monsoon region of Asia, with its coastal areas receiving over
5,000mm of rain annually.
Myanmar has huge tourism potential, with its pristine beaches, snow
capped mountains, jungle trails and spectacular temples.
130
There are around 100 different ethnic groups within Myanmar. Much of
the countrys population is rural and occupied by agricultural activities.
Many of these ethnic groups are largely untouched by western cultures,
leaving their own rich cultural traditions still intact. Buddhism is the main
guiding force in the lives of the Myanmar people.
Myanmar joined ASEAN along with Lao PDR on 23 July 1997.
Joined ASEAN:
23 July 1997
Head of State:
President Thein Sein
Area:
676,578km2
Border countries:
Lao PDR, Thailand, Bangladesh, China, India
Coastline:
1,930km
Capital city:
Naypyidaw
Total population:
53.3 million
992,000
Climate:
Summer is tropical, cloudy, hot and humid. Southwest monsoon June to September. Winter less cloudy with
lower humidity. Northeast monsoon December to April.
Languages:
Burmese
Religions:
Buddhist (89%), Christian (4%), Muslim (4%), other (3%)
Ethnic groups:
Burman 68%, Shan 9%, Karen 7%, Rakhine 4%, Chinese 3%, Indian 2%, Mon 2%, other 5%
Monetary unit:
Kyat (MMK)
Natural resources:
Petroleum, timber, tin, antimony, zinc, copper, tungsten, lead, coal, marble, limestone, precious stones,
natural gas, hydropower
Major exports:
Natural gas, wood products, pulses, beans, fish, rice, clothing, jade, gems
COUNTRY REFERENCE
MYANMAR
Main export trading countries: Thailand 44%, India 17%, China 15%, Japan 9% , South Korea 4.7%.
Major imports:
Fabric, petroleum products, fertiliser, plastics, machinery, transport equipment, cement, construction materials,
crude oil, food products
Main import trading countries: China 40%, Thailand 17%, South Korea 10%, Japan 9.3%, Singapore 7.5%.
Internet domain:
.mm
+95
131
THE PHILIPPINES
The Philippines saw GDP growth of 7.3% in 2013, following 6.6% growth
the previous year. The country has been among the fastest expanding
economies in Southeast Asia, averaging GDP growth of around 5% since
2002, much higher than that achieved in the previous two decades.
Government spending is increasing as it seeks to bring in the private
sector to provide much needed development of the countrys
infrastructure. Export income, notably from services industries, such as
business process outsourcing, continues to grow. A stable level of
remittances also provides a strong basis for currency stability and is
helping to build up international reserves. The Philippines enjoys a
savings rate that exceeds investment, while its human resources
continue to be in high demand around the world.
The Philippines is made up of over 7,000 islands but the majority
of people live on just 11 of them. Its islands make it the country
with the fifth longest coastline in the world. It is bordered by the
Philippine Sea to the east, the South China Sea to the west and
the Celebes Sea to the south. The island of Borneo is located a few
hundred kilometres southwest.
Most of the mountainous islands are covered in tropical rainforest and
are volcanic in origin. The highest mountain is Mount Apo, which
measures up to 2,954m above sea level and is located on the island of
Mindanao. To the east of the Philippines on the ocean floor lies the
Philippine Trench, where the Galathea Depth is the third deepest place
on earth. The longest river is the Cagayan in northern Luzon. Manila Bay,
upon the shore of which the capital city of Manila lies, is connected to
Laguna de Bay, the largest lake in the Philippines, by the Pasig River.
The Philippines contains some of the worlds most amazing scenery,
including the beaches of Boracay, Panglao and Pagudpad, as well as
historical sites such as Intramuros, Cebu City, Corregidor and Bataain.
132
The main religion in the Philippines is Christian Malay, with over 80% of
Filipinos practicing Catholicism. Family values are at the heart of Filipino
tradition. It is recognised and accepted that family members often work
for the same company. There is a strong sense of social propriety to
conform to societal norms of behaviour.
The Philippines are a founder member of ASEAN.
Joined ASEAN:
Head of State:
President Benigno S. Aquino III
Area:
300,000km2
Border countries:
None
Coastline:
36,289km
Capital city:
Manila
Total population:
98.39 million
11,449,000
Climate:
Tropical marine. Northeast monsoon from November to April and southwest monsoon May to October
Languages:
Filipino, English
Religions:
Roman Catholic 80.9%, Muslim 5%, Evangelical 2.8%, Iglesia ni Kristo 2.3%, Aglipayan 2%, other Christian
4.5%, other 1.8%, none 0.1%
Ethnic groups:
Tagalog 28.1%, Cebuano 13.1%, Ilocano 9%, Bisaya/Binisaya 7.6%, Hiligaynon Ilonggo 7.5%, Bikol 6%,
COUNTRY REFERENCE
THE PHILIPPINES
Waray 3.4%, other 25.3%

Monetary unit:
Peso (PHP)
Natural resources:
Petroleum, gold, silver copper, nickel, cobalt, timber, salt
Major exports:
Semi-conductors and electronic products, transport equipment, garments, copper products, petroleum
products, coconut oil, fruits
Main export trading countries: China 23%, Japan 13%, US 12%, Hong Kong 9.8%, Singapore 5.4%.
Major imports:
Electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains,
chemicals, plastic
Main import trading countries: China 13%, Japan 11%, US 19%, South Korea 8.9%, Other Asia 6.7%.
Internet domain:
.ph
+63
133
SINGAPORE
the north and the Tuas Second Link in the west. Jurong Island, Pulau
Tekong, Pulau Ubin and Sentosa are the largest islands after Singapore
Island, which contains the capital, Singapore City.
Singapore is one of the wealthiest countries in Asia. Its highly globalised
economy grew by 3.9% in 2013, compared to 1.3% the previous year.
This reflects the gradual emergence from recession by countries
beyond the Region. The countrys strong manufacturing and services
sectors are the main strengths of its economy. Singapore, even with
relatively high salary levels, continues to be an attractive destination for
FDI, particularly high technology companies. The island is seen as
providing one of the worlds most business friendly regulatory
environments and is ranked among the worlds most competitive
economies. There is a growing focus on value added activities including
chemical and biotechnology industries.
Singapore is located off the southern tip of the Malay Peninsular, 137km
north of the Equator. As an island country, it is made up of 63 islands
and is separated from Malaysia by the Straits of Johor. There are two
man made connections to Malaysia, the Johor-Singapore Causeway in
134
Singapores land area consists of forest and nature reserves and its
primary rainforest is Bukit Timah. Most work in Singapore is in the
service sector and poverty levels are low compared to other countries
in the Region. Singapore has the world's highest percentage of
millionaire households.
Tourism forms a large part of the economy with over ten million visitors
each year. Gambling has been legalised and the countrys casino resorts
have proved popular destinations.
A largely Buddhist (Chinese) state, Singaporians may claim that they are
an egalitarian society, yet they retain strong hierarchical relationships in
most aspects of their lives. Singapore is a multi-ethnic society, where
culturally diverse, Chinese, Malay and Indian traditions co-exist in a
westernised cosmopolitan metropolis.
Singapore is a founder member of ASEAN.
Joined ASEAN:
Head of State:
President Tony Tan Keng Yam
Area:
697km2
Border countries:
None
Coastline:
193km
Capital city:
Singapore City
Total population:
5,460,302
Climate:
Tropical, hot and humid with two monsoon seasons. Northeastern monsoon from December to March,
southwestern monsoon June to September
Languages:
Mandarin, English, Tamil, Malay, Hokkien, Cantonese, Teochew
Religions:
Buddhist 42.5%, Muslim 14.9%, Taoist 8.5%, Hindu 4%, Catholic 4.8%, other Christian 9.8%, other 0.7%,
none 14.8%
Ethnic groups:
Chinese 76.8%, Malay 13.9%, Indian 7.9%, other 1.4%
Monetary unit:
Singapore dollar (SGD)
Natural resources:
Fish, deepwater ports
Major exports:
Machinery and electronic equipment, consumer goods, pharmaceuticals, chemicals, refined
COUNTRY REFERENCE
SINGAPORE
petroleum products.
Main export trading countries: China 14%, Malaysia 12.%, Indonesia 12%, Hong Kong 7.4%, Australia 6%.
Major imports:
Machinery and equipment, foodstuffs, consumer goods, mineral fuels, chemicals
Main import trading countries: China 12%, Malaysia 10%, South Korea 8.4%, US 7.1%, Japan 6.3.
Internet domain:
.sg
+65
135
THAILAND
Thailand is the second largest economy in Southeast Asia. Its GDP at
US$387.3 billion in 2013, is second only to that of Indonesia in the ten
nation ASEAN group. The country is one of the worlds most important
manufacturers of electronic products including computers and
integrated circuits. Thailand has also developed as the principal car and
motorcycle manufacturer in the Region. Its tourism sector has been one
of the worlds fastest growing over the last decade. The Kingdom is a
popular choice for foreign investors as it ranks 18th in the World Banks
Ease of Doing Business Report in 2014.
Thailand is located at the centre of the Indochina Peninsula and is
bordered to the north by Myanmar and Lao PDR, to the east by Lao PDR
and Cambodia, to the south by the Gulf of Thailand and Malaysia and to
the west by the Andaman Sea and Myanmar.
Thailand is home to several distinct geographic regions. The north of the
country is mountainous, with the highest point being Doi Inthanon at
2,565m above sea level, the northeast consists of the Khorat Plateau and
the east by the Mekong River.
Southern Thailand has the Kra Isthmus, a narrow land bridge which
connects the Malay Peninsula with the mainland of Asia. The centre is
dominated by the Chao Phraya River valley, which runs into the Gulf of
Thailand. The Gulf of Thailand is also an industrial centre, with the main
port in Sattahip being the entry gates for Bangkoks Inland Seaport.
Thailand is the Greater Mekong Sub-regions most visited international
destination. Other top destinations include Bangkok, Chiang Mai and the
beach resorts of Pattaya and Phuket.
The Andaman Sea hosts the most popular and luxurious resorts in Asia.
Phuket, Krabi, Ranong, Phang Nga and Trang and their lush islands all
lay along the coast of the Andaman.
The Chao Phraya River and Mekong River are the sustainable resources
of rural Thailand. Industrial scale production of crops use both rivers and
their tributaries. The Gulf of Thailand covers 320,000km2 and is fed by
the Chao Phraya, Mae Klon, Bang Pakong and Tapi Rivers.
136
Thailand is a stronghold of Buddhism. Many of the rules of etiquette are

by-products of the Buddhist religion. Great emphasis is placed on
outward forms of courtesy and politeness. The family is the cornerstone
of Thai culture. Thailand has a strong hierarchical social structure.
Thailand is a founder member of ASEAN.
Joined ASEAN:
Head of State:
His Majesty King Bhumibol Adulyadej
Area:
513,120km2
Border countries:
Myanmar, Cambodia, Lao PDR, Malaysia
Coastline:
3,219km
Capital city:
Bangkok
Total population:
67 million
6,902,000
Climate:
Tropical, rainy, warm, cloudy southwest monsoon from May to September. Dry, cool northeast monsoon,
November to March
Languages:
Thai, English, ethnic and regional dialects
Religions:
Buddhist 94.6%, Muslim 4.6%, Christian 0.7%, other 0.1%
Ethnic groups:
Thai 75%, Chinese 14%, other 11%
Monetary unit:
Baht (THB)
Natural resources:
Tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, gypsum, lignite, fluorite, arable land
Major exports:
Textiles and footwear, fishery products, rice, rubber, jewellery, automobiles, computers, electrical appliances
COUNTRY REFERENCE
THAILAND
Main export trading countries: China 14%, Japan 10%, Malaysia 5.7%, US 9.7%, Indonesia 5.2%, Malaysia 5%.
Major imports:
Capital goods, intermediate goods and raw materials, consumer goods, fuels
Main import trading countries: Japan 22%, China 18%, Malaysia 6.3%, US 5.3%, South Korea 4.5%
Internet domain:
.th
+66
137
During the last 25 years, Vietnam has emerged as one of Asias great
success stories. GDP growth of 5.3% was recorded in 2013, a level of
growth that has been maintained since 1986, faster than that of any other
Asian country with the exception of China, according to consultancy firm
McKinsey. Vietnam has benefited from a programme of internal
restructuring, a transition from its agricultural base towards
manufacturing and services. The country has also prospered since joining
the World Trade Organisation in 2007. This was followed by a
normalisation of trade relations with the US and this has helped to
ensure Vietnam is consistently ranked as one of Asias most attractive
destinations for foreign investors.
Vietnam is the most eastern country on the Indochina Peninsula. It is
bordered by China to the north, Lao PDR to the northwest, Cambodia to
the southwest and the South China Sea to the east. With a population of
over 90 million, Vietnam is the 13th most populous country in the world.
Vietnam is a country of tropical lowlands, hills and densely forested
highlands, with level land covering no more than 20% of the area. The
country is divided into the highlands and the Red River Delta in the north,
the Giai Truong Son (central mountains), the coastal lowlands and the
Mekong River Delta in the south.
The nation has seven developed ports and harbours at Cam Ranh, Da
Nang, Hai Phong, Ho Chi Minh City, Hong Gai, Qhi Nhon and Nha Trang.
There are also more than 17,000km of navigable waterways, which play
a significant role in rural life.
Vietnam has a vast cultural legacy and is also endowed with a 3,444km
coastline, providing ample opportunity to develop sea based tourism
around spectacular bays, beaches and islands. These include areas such
as Mong Cai City, Halong Bay, Hai Phong City, Nam Dinh Province and
Da Nang.
The native Vietnamese are the largest ethnic group, containing 90% of
the population of this largely Buddhist country. The teachings of
Confucius highly influence the individual in Vietnamese society. This
stresses for, amongst other things; loyalty, honour, sincerity and respect
for age. Collectivism is a general part of society with an individual seen as
secondary to a group.
Vietnam joined ASEAN on 28 July 1995, making it the seventh member.
138
VIETNAM
Joined ASEAN:
28 July 1995
Head of State:
President Truong Tan Sang
Area:
331,210km2
Border countries:
Lao PDR, Cambodia, China
Coastline:
3,444km (excluding islands)
Capital city:
Hanoi
Total population:
89.7 million
2,668,000
Climate:
Tropical in the south, monsoons in the north with the hot, rainy season May to September. Warm and dry
October to March
Languages:
Vietnamese, English, French, Chinese, Khmer
Religions:
Buddhist 9.3%, Catholic 6.7%, Hoa Hao 1.5%, Cao Dai 1.1%, Protestant 0.5%, Muslim 0.1%, none 80.8%
Ethnic groups:
Kinh (Viet) 85.7%, Tay 1.9%, Thai 1.8%, Muong 1.5%, Khmer 1.5%, Mong 1.2%, Nung 1.1%, others 5.3%
Monetary unit:
Dong (VND)
Natural resources:
Phosphates, coal, manganese, rare earth elements, bauxite, chromate, timber, hydropower
Major exports:
Clothes, shoes, marine products, crude oil, electronics, wooden products, coffee, rice, machinery
COUNTRY REFERENCE
VIETNAM
Main export trading countries: US 16%, Japan 13%, China 12%, Germany 5.7%, South Korea 5%.
Major imports:
Machinery and equipment, petroleum products, steel products, raw materials for clothing and shoe industries,
electronics, plastics, automobiles
Main import trading countries: China 28%, South Korea 15%, Japan 9.5%, Singapore 5.9%, Thailand 5.3%.
Internet domain:
.vn
+84
139
Useful contacts
ASEAN
The ASEAN Secretariat
70A Jl. Sisingamangaraja
Jakarta 12110
Indonesia
Tel: +62 21 7262991 or 7243372
Fax: +62 21 7398234 or 7243504
Web: www.asean.org
UK Trade & Investment
1 Victoria Street
London SW1H 0ET
United Kingdom
Tel: +44 20 7215 5068
Email: [email protected]
EU-ASEAN Business Council Secretariat
1 Phillip Street
#12-01 Royal One Phillip
Singapore 048692
Tel: +65 6836 6681
Fax: +65 6737 3660
Web: www.eu-asean.eu
1101 17th St., NW Suite 411
Washington DC 20036
USA
Tel: +1 202 289 1911
Fax: +1 202 289 0519
Email: [email protected]
Web: www.us-asean.org
140
HELPING BUSINESSES
SUCCEED IN ASEAN
MARSH AND MERCER ARE GLOBAL LEADERS IN RISK
AND IN HUMAN CAPITAL CONSULTING.
Together we understand the challenges of doing business in ASEAN better than most.
Constantly changing risk and human capital landscape demands innovative approaches
to complex challenges. At Marsh and Mercer, we work with you to understand your
business, and bring you the best of our global capabilities combined with our deep local
knowledge to help you succeed in ASEAN.
asia.marsh.com | asean.mercer.com

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Investing in

Association of Southeast Asian Nations

one vision one identity one community

| Brunei Darussalam | Cambodia | Indonesia | Lao PDR | Malaysia |

Copyright Allurentis Limited 2014. All rights reserved.

Baker & McKenzie

Berry Appleman Leiden

Photos courtesy of: www.istockphoto.com | www.123rf.com | www.shutterstock.com

Chandler & Thong

SICPA Asia Development

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

Introduction: Promise of new

close to zero in many sectors for trade between Brunei Darussalam,

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

harmonised ASEAN, which, if it were a single country, would have the

Analysis by Bank of America Merrill Lynch, drawing on national statistics,

The availability of manufacturing and logistical facilities in the Region, in

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

H.E. Le Luong Minh,

H.E. Le Luong Minh: Secretary-General of ASEAN

of liberalisation, protection, facilitation and promotion,

US-ASEAN Business Council

Alexander Feldman, President,

As the US-ASEAN Business Council celebrates 30 years

partnerships aimed at improving the economic

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

EU-ASEAN Business Council

The trade relationship between the EU and ASEAN is

support the establishment of Free Trade Agreements

UK-ASEAN Business Council

Kevan Watts, Chairman,

The report suggests that the UK faces an important

Community (AEC) will emerge at the end of 2015. The

BUSINESS - FINANCE - LEGAL

Integration and collaboration - How businesses

CASE STUDY: HSBC

The distraction of China's growth has seen much of the

A decade ago, the majority of Western companies that

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

CASE STUDY: HSBC

For instance, in 1975 manufactured goods made up around 18% of

Indeed, the burgeoning growth of trade volumes between each

BUSINESS - FINANCE - LEGAL

people and infrastructure, which could be used to help shift other

infrastructure development has significantly led to GDP growth.

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

destination exposes them to production risks. Corporations are

they may appear today. Nevertheless, it will take much collaboration

Regulatory transparency and consistency of financial services are other

In addition, the introduction of the AEC will also go some way to

Collaboration and future growth

CASE STUDY: HSBC

What is clear is that opportunities for ASEAN based businesses are in

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

Corridors and connections

CASE STUDY: BAKER & MCKENZIE

BUSINESS - FINANCE - LEGAL

The purpose of this report is to explore what these new economic

Developed/mature markets: The countries of North America,