ASEAN economic growth has considerably outrun the other regions. This has turned ASEAN into a strong economy in the world, which brings opportunities as well as challenges. How can ASEAN pass any obstacles to become the top economy of the world?
Gross Domestic Product (GDP) per capita in ASEAN has shown a significant increase since 2000. Reddal has reported that ASEAN’s GDP is USD 2.4 trillion with 600 million people spread all over Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. With the large population, the rising GDP per capita means demands of consumer goods and services are increasing from the middle class as well as encourages investments into infrastructure and real estate.
Besides, ASEAN is also a prospective manufacturing centre for the future. The rising labor costs in China will be a chance for ASEAN to grab a bigger role in the global manufacturing operations, especially with its large number of young productive workforce. Furthermore, the integration of ASEAN through ASEAN Economic Community (AEC) will allow local companies to expand and develop.
Of course, there are some challenges that should be resolved wisely. One of them is related to the low productivity as a result of low qualified workers. Skilled and qualified human resources will then need to be developed through training and education.
The International Policy Digest stated that countries in ASEAN have different levels of inflation, causing different levels of investment and purchasing powers. This can indirectly lead to losses in some sectors and industries. Besides, the high degree of political and socio-cultural diversity is another big challenge in integrating the region. Some ASEAN countries do not have the sufficient financial sector regulation and infrastructure that are required for a smooth integration.
Therefore, in order to maximize ASEAN potential through AEC, it will need improvements in the structural and institutional management, so that prosperity is equally shared among the population.
A positive growth is also observed in ASEAN startup industry. As reported by ASEAN Up, the digital population in the region will grow by 14% year-on-year, with 480 million internet users by 2020 from 260 million in 2015. There are approximately 7,000 startups, with 80% of them are based in Singapore, Indonesia, and Vietnam. USD 1.1 billion investment has been received, and 88% of the investment has gone to Singapore and Indonesia.
Despite of this astonishing growth, there are also challenges in ASEAN startup industry, including the limited skilled workers (especially engineers), the complication of payment methods (especially for people outside of the banking system), poor internet infrastructure, poor logistics infrastructure, low consumer’s trust, and high internet fraud.
This article was first published by Global Indonesian Voices.