Asean poised for gains from trade war

“According to our study, up to 35.4 per cent of investors from the USA who have businesses in China are considering to moving their manufacturing plants from China to others countries, as a result of the USA and China facing off in their trade war since last year,” Dr Simon Ogus, chief executive officer of DSG Asia, said at the event in Singapore yesterday.
He and other investments experts were sharing their views at a seminar titled The Future of China-Asean Relations in a Divided World, which was held as part of the InvestAsia2019 conference in the city state. The two-day event, conducted by Maybank Kim Eng and ICBC, opened yesterday.
Ogus said that 18.5 per cent of the American respondents in the survey that planned to relocate their manufacturing plants are studying the possibility of moving them to Asean countries.
The survey showed that the industries in which the interest for a move to Southeast Asia is keenest include those covering consumer products, technology and telecommunications hardware, automotive production and chemicals.
 “Asean is a region with the potential for business expansion, as the markets in the region are opening up on regulations and promoting foreign direct investment,” Maybank Kim Eng’s regional economist Cha Huk Bin said.
Bin said Vietnam and Thailand, in particular, have been drawing more foreign direct investment compared with their rivals in the Asean region, reflecting the promotion efforts of both countries.
According to Mayank Kim Eng research, foreign direct investment in Vietnam has grown by an average of 9 per cent a year since 2013. In Thailand, growth in foreign direct investment has been particularly strong in the chemicals, electronics and automotive industries, Bin said.
The deputy chairman (China) of APS Asset Management, Tan Kong Yam, said Asean has a close relationship with China and that a free-trade agreement between the two sides has opened up opportunities for China’s investors to expand their investments in Asean countries.
 “The trade war between China and the USA has created opportunities for Chinese investors to expand their investments outside the USA. Asean is one of the top choices for Chinese investors looking to expand their investments,” Tan said.
Abdul Farid Alias, group president and chief executive officer of Maybank, said the global economy is weakening, in no small measure due to a widespread sense of uncertainty. A great source of this uncertainty is the ongoing trade war between the US and China, he said
Alias, who was speaking during a separate session titled “Doing Right in a Period of Uncertainty” at the same seminar, said the real problem is not confined to the risks that tariffs pose to the present economic order. The conflict as a whole has cast serious doubts on the future of global economic connectivity, with world trade volumes plunging at the fastest rate since the depths of the financial crisis in May 2009.
Against the backdrop of this fragmented global environment, countries around the world have started sliding into new regional arrangements, especially in Asia. To prove this point, the share of intra-Asian trade to total trade rose to 61 per cent in 2018 from 57.3 per cent in 2016, Alias said.
Intra-regional FDI rose to 50.2 per cent in 2017 from 48 per cent in 2015. About half of all jobs created from greenfield investments in Asia originated from within the region. There are signs the transition from globalisation to regionalisation is fast under way, with many of the world’s future trends expected to converge in Asia. The region’s rapid progress has surprised even the most critical sceptics, Alias said.
“In my view, taking lessons from our own past, and lessons from the West today, Asean economies have a profoundly unique opportunity in charting an entirely new course for the future. This is one that could balance economic freedom and free-market principles with a deep sense of responsibility towards society and the environment,” he said.