Asean, which is celebrating its golden anniversary this year, includes countries with higher per capita income like Singapore and Brunei and middle-income economies like Indonesia, Thailand, Malaysia the Philippines and Vietnam. There are also the “new frontiers” like Myanmar, Laos and Cambodia.
The Philippines chairs Asean this year.
The Asean Economic Community (AEV) created by Asean embodies its goal to establish a stable, prosperous and competitive regional economy—one that seeks to benefit its citizens and allow them to enjoy better lives. It seeks to establish a region where goods and services are freely traded; where investments are welcomed and encouraged, and where professionals and skilled workers are able to cross borders and practice their profession with greater ease.
Asean today represents the world’s seventh-largest market with the third-biggest labor force behind China and India and there are projections it will become the fourth-largest economic bloc by 2030.
In the past five decades, Mobius noted that Asean countries had made great economic strides, outpacing much of the world at large in terms of growth rates, albeit from a low base. In some cases, this progress has been quite dramatic. For example, since 1960, Singapore’s per-capita GDP (gross domestic product) grew from US$428 to US$52,961, while Malaysia’s per-capita GDP grew from US$235 to US$9,507
“As investors, the diversity of the region is particularly exciting with a number of potential opportunities in almost every endeavor of activity, from mining to consumer goods to technology. As trade and investment barriers come down, the Asean group will represent a huge market,” Mobius said.
“Rising growth rates have also created greater prosperity for the people at large and since Asean was formed, we’ve seen a new generation of consumers emerge. These countries by and large also boast youthful populations in their most productive years, which we think bodes well for their future,” he added.
Mobius noted that Asean consumers were also increasingly moving online, even in the newest and smallest markets like Myanmar.
The biggest general risk to markets in the region, however, is seen emanating from a possible “black swan” event, a market shock that cannot be predicted such as any slowdown or derailment of China’s adjustment process given the importance of this market in the region.
On an even broader level, risks ARE also seen from the reality that the world was still “unbalanced,” with many countries having high debt levels, Mobius said.
“Some say the ‘Asean Way’ has also been a hindrance in many aspects—bogged down with more meetings and discussion than actual action. The region hasn’t achieved the type of economic integration—or clout—that the European Union (EU) has. Certainly Asean is much further away from the degree of integration that the EU has achieved,” Mobius said.
But some critics argue that Asean economies were just too diverse culturally, economically and politically to rise to be a stronger, unified force.
“In our view, the move toward a common currency and common banking system represents the next step for Asean, but we must remember that the concept of a unified Europe goes further back in history. Louis IV bought a large part of Europe under his control. The royal families of Europe intermarried and provided a future base for more cooperation. We don’t have a similar history in Asia (except for colonial powers, which had some integrating influence),” Mobius said.
Another challenge to the region is China’s opposition to a strong Asean, the fund manager said.