ASEAN-BIZ | The ASEAN Century | Southeast Asia on the rise
ASEAN
INSIDER
Opportunities and trends shaping the world’s fastest growing region
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The ASEAN Century |
Southeast Asia on the rise
From ongoing great power tensions, a slowing global economy, and persistent inflation, recent headlines suggest a world unraveling. However, a broader view reveals a very different picture for Southeast Asia.
Despite challenges, ASEAN continues to be a bright spot for those looking to launch, grow, expand, or invest in businesses over both the near and long term. ASEAN’s economic potential remains enormous, particularly in rapidly developing economies like Malaysia, the Philippines, Thailand, Indonesia, and Vietnam.
Several trends—ranging from growing domestic and export markets, favorable demographics, and technological integration—are accelerating ASEAN’s rise. The region remains on track to become one of the biggest economic players of the 21st century.
We explore the opportunities, challenges, and long-term potential of doing business in the region.
Trends accelerating ASEAN’s rise
Domestic
markets
Export
markets
Favorable
demographics
Technological
integration
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Just as the rise of the Asian Tigers—Japan, South Korea, Singapore, and Hong Kong—defined the post-war 20th century, and China’s growth shaped the early 21st, ASEAN and neighboring India are poised to shape the next phase of global economic history.
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Sam Cheong
Head of Group Foreign Direct Investment Advisory, UOB
Since the launch of the ASEAN Economic Community in 2015, the region has advanced toward deeper economic integration, enhancing cross-border trade and investment. This framework has been instrumental in positioning ASEAN as a unified market and production base, driving regional growth and attracting significant foreign direct investment.
Two key structural advantages give ASEAN a distinct edge:
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World-Leading Economic Growth
ASEAN’s economies lead global growth.
For entrepreneurs and business leaders seeking the next big growth story, there is no better place to be right now than ASEAN.
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Powerful Demographics
ASEAN’s greatest asset is its people. Southeast Asia has some of the most favorable demographics globally. Over half of ASEAN’s population is under 30, and the region’s proportion of young workers and consumers is expected to rise until 2038, peaking at 220 million.
We are cautiously optimistic that with continued consistent reforms, properly implemented, Indonesia will be an economic force to reckon with in the next decade or so.
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#2
A bright spot in a
recovering world
While economies around the globe continue their slow march back to pre-pandemic levels, overall economic growth remains – and is likely to remain – anemic over the next year. Global GDP growth is expected to reach 3% in 2024 and 3.1% in 2025, well below the 3.7% growth of the 2010-2019 period.
In contrast, ASEAN’s outlook is much brighter, with a forecasted growth rate to reach 4.5% in 2024 and 4.7% in 2025. Individual countries may experience even higher growth: Indonesia at 5%, Vietnam at 6.2%, and the Philippines at 6%. Even Thailand, with a projected growth rate of 2.7%, and Malaysia, at 4.6%, will roughly match or exceed global averages.
Malaysia’s economy is on the rise supported by favorable mega trends such as shifts in global supply chains, the global push towards green energy, as well as the upcycle of the global semiconductor industry.
“Our data shows 70% of Malaysian businesses see their performance improving in 2024 and expect to see revenue growth each year for the next 3 years,” says Ng Wei Wei, CEO, UOB Malaysia. “Even among those not currently upbeat, a significant portion expects improvement by 2025, with a smaller group projecting recovery by 2027.”
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While consumers remain anxious about the cost of essentials and their ability to save, many see hope. Ng Wei Wei, CEO, UOB Malaysia, reveals, “More than four in five consumers in the region expect to be financially better off by the second half of the new year.”
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#3
A hub for global trade, regional integration, and tech innovation
By 2030, ASEAN’s economies are projected to grow to $4.5 trillion, making it the fourth-largest economy in the world. This growth will be fueled by several factors:
Rising Regional and Global Trade
ASEAN is becoming a major international trading hub. Its member states are increasingly interlinked through infrastructure improvements and economic corridors, such as Malaysia’s Johor-Singapore Special Economic Zone (SEZ) and Thailand’s Eastern Economic Corridor (EEC).
ASEAN’s participation in trade agreements like the Regional Comprehensive Economic Partnership (RCEP) strengthens its position as a vital hub for cross-border trade, with duty-free access to 2.2 billion consumers globally.
Countries like Malaysia, Indonesia, and Thailand are capitalizing on export-oriented sectors.
Thailand’s longer-term business outlook over the next 10–15 years presents a promising and vibrant landscape, positioning the country as a key regional player for investment and business growth.
The region’s shift into green technology, semiconductors, and advanced manufacturing further integrates it into global supply chains. “Thailand is poised to lead the region’s green transformation,” says Richard Maloney, CEO, UOB Thailand. “With a national commitment to achieving carbon neutrality by 2050, investments in renewable energy, electric vehicles, and sustainable urban development will be central to the country’s growth.”
Foreign Direct Investment (FDI) continues to play a crucial role in shaping Southeast Asia’s trade landscape. Malaysia has attracted significant FDI in high-value industries, thanks to its developed infrastructure and supportive government policies. The Johor-Singapore SEZ will establish a “green lane,” with UOB as a partner to facilitate foreign direct investments in prioritized sectors. Indonesia, with its vast market and structural reforms, presents new opportunities for foreign investors. Thailand’s strategic location and infrastructure investments make it a key logistics and manufacturing hub for regional and global trade.
US-China Tensions
The ongoing decoupling of the US and China has thus far benefited ASEAN. Companies seeking to reduce dependence on China have increasingly turned to ASEAN as part of a “China + 1” strategy. ASEAN’s neutral stance, dynamic workforce, and economic diversity have made it an attractive destination for businesses.
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Rapidly Maturing Domestic Markets
ASEAN’s integrated consumer base and increasing regional trade ties will continue to strengthen Southeast Asia’s economic resilience.
Factors Driving Southeast Asia’s Domestic Markets
Indonesia, the largest economy in Southeast Asia, continues to see domestic consumption drive GDP growth. “Indonesia really is a must-have market in Southeast Asia and that trajectory is unlikely to be beaten by any domestic-driven market in the region,” says Hendra Gunawan, CEO, UOB Indonesia.
Malaysia’s domestic market remains strong, supported by household consumption, a stable labor market, and infrastructure investments. The Madani Economy 10-year master plan underscores the importance of domestic consumption for sustained growth.
Thailand, though recovering more slowly, is gaining momentum with urbanization, a growing middle class, and digital adoption. Its focus on a cashless society and green technologies positions it for long-term rowth.
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#4
ASEAN as a
growing tech powerhouse
Southeast Asia is rapidly emerging as a global tech hub. Technology will remain a key driver of growth and innovation. ASEAN’s young, tech-savvy population and supportive government policies create fertile ground for the digital economy. E-commerce, digital payments, and fintech sectors are experiencing exponential growth.
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Malaysia
Indonesia
Thailand
The Digital Economy Framework Agreement (DEFA) will further boost digital integration across ASEAN. ASEAN’s commitment to digital transformation is not only reshaping its domestic economies but also enhancing global competitiveness.
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#5
Challenges, risks, and maintaining momentum
Doing business in ASEAN is not without risk. Policymakers and business leaders are increasing focus in the following areas:
Skills and Infrastructure Gaps
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Geopolitical Tensions & Global Economic Uncertainty
Climate Change & Environmental Risk
Over the next 100 years, Southeast Asia will remain a land of endless opportunity with one of the most competitive, vibrant, and dynamic consumer markets to be found anywhere.
ASEAN’s growth story is rooted in strong fundamentals, youthful demographics, and rising digitalization. While challenges remain, strategic investments in education, technology, and sustainability will determine the region’s future success. For investors and businesses, ASEAN offers significant opportunities, but staying ahead means navigating its evolving landscape with agility and foresight.
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Hear from UOB experts
Richard Maloney
Chief Executive Officer
UOB Thailand
Ng Wei Wei
Chief Executive Officer
UOB Malaysia
Hendra Gunawan
Chief Executive Officer
UOB Indonesia
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Outlook Study 2024Get insights into the key trends, challenges, and strategies that are shaping the business landscape across ASEAN.
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