Market Highlights: Robust Prospects and Growing Demand in Southeast Asia

Focus Areas

The Future of ASEAN’s Auto Industry

  • Deutsche Bank reports that car ownership in ASEAN will rise to around 55 million by 2050. The bank believes growth in car sales will be over 10% in average in the coming years
  • Young ASEAN countries like Cambodia and Laos could achieve higher than average growth rates in vehicle sales
  • According to business consulting firm Frost & Sullivan, ASEAN will become the 6th biggest automotive market globally by 2018. Peoples of ASEAN, especially those in Indonesia will drive local demand given shift of ownership from motor bikes to cars, multi-purpose vehicles, and sport-utility vehicles
  • In 2020, Thailand, Indonesia and Malaysia are expected to contribute to 96% of total outputs in ASEAN, and total light vehicle assembly is projected to reach 6.8 million

Unlocking ASEAN’s Manufacturing Potential

  • Trade activity is increasing in Southeast Asia, proving its potential to become a thriving economic powerhouse and manufacturing hub
  • ASEAN has the world’s third-largest population and is expected to reach 680 million people by 2020. Analysts predict that consumer expenditures will reach US$2.3 trillion by 2020
  • Intra-ASEAN investments were particularly strong in manufacturing (US$6.6 billion) and real estate ($4.6 billion) in 2014 according to ASEAN Investment Report 2015
  • In a recent report by the McKinsey Global Institute, if ASEAN implements the AEC’s integration strategy fully and is able to capture a larger share of global manufacturing, the region could gain US$280–US$625 billion in annual GDP by 2030
  • Over the next three to five years, smaller ASEAN nations are expected to move up the manufacturing value chain

Infrastructure Spending in Southeast Asia on the Rise

  • In Indonesia, overall infrastructure spending in the country is expected to grow to around US$165 billion by 2025. Most significant growth will likely be in the heavy manufacturing sector, which is expected to grow to US$46 billion by 2025, driven by expansion of the mining sector
  • Malaysia’s infrastructure spending is expected to grow by around 9% a year till 2025. Investment growth in the utilities segment expected to be the most significant, owing to its higher need for improvement in electricity infrastructure
  • For the Philippines, spending in infrastructure is expected to grow at around 10% a year in the next decade, reaching a total of US$27 billion a year by 2025, focusing on manufacturing, transportation and communications, and social infrastructure
  • There is positive outlook for increase in infrastructure investment in Thailand which is expected to reach US$58.5 billion by 2025, with significant spending in transportation due to the expected high speed rail project
  • Vietnam’s infrastructure spending is expected to top US$56 billion by 2025 with growth rate of around 9% a year. Investments are expected in the transportation and manufacturing sectors

Source: Automotives, Accelerating towards success / Invest in ASEAN 2016, Autofacts / PwC LLP 2015, Infrastructure Investment and Connectivity / ASEAN Investment Report 2015, Unlocking ASEAN’s manufacturing potential / Future Ready Singapore 2015, A Summary of South East Asian Infrastructure Spending: Outlook to 2025 / PwC LLP 2014