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Asian Firms to Target Mekong; 42pc Eye Myanmar Expansion over Ten Years: EIU

The business landscape in Asia will change significantly over the next decade, as companies in the region focus more on new growth opportunities in countries such as Myanmar, Vietnam and Thailand, and less on China, says a new report from the Economist Intelligence Unit (EIU).

The report, integrAsian: How Asia’s economic ties are changing the business landscape, is based on a survey of 525 senior executives in seven markets in Asia and includes case studies from the energy, manufacturing and technology sectors.

It shows that in the next five years, Asian companies are primarily targeting China, India and Malaysia to open new offices or to build factories. In the next ten years, they will focus much more on Myanmar, Vietnam and Thailand.

Whereas 71 percent of respondents say they are planning to build a new factory or office in China in five years, only 23 percent will do so in ten years.

Firms targeting Myanmar for expansion will nearly double from 22 percent in five years to 42 percent in ten years. Similarly, companies planning to expand in Vietnam and Thailand over the next five and ten years will respectively increase from 30 percent to 38 percent and 31 percent to 36 percent. 

Rising labour costs in China have been widely cited as a factor driving manufacturers to consider moving production to countries in the Mekong delta.

The study shows that the services sector is also keen on expanding in Southeast Asia. In both the financial services and professional services industries half of the survey respondents say they are planning to open new offices in Myanmar in the next decade.

Despite reduced new investment interest beyond the next five years, China’s importance as one of the drivers of the region’s economy will not diminish, the report says.

Companies in China are poised to take advantage of growing trade links with other parts of Asia, and 41 percent of Chinese firms say they have already adopted a single sales strategy for the entire region.

In addition, nearly one of every five respondents says they will use the renminbi to settle 20-50 percent of their payments and invoicing over the next five years, second only to the US dollar.

Kevin Plumberg, the editor of the report, said: “Liberalising intra-regional trade and investment is high on the agenda of some governments in Asia, but what is striking is how companies in the region are accelerating economic integration.

“Pursuit of opportunities in these markets mean that today’s Asian frontier markets, such as Myanmar and Vietnam, may be the high-growth emerging markets of tomorrow.”

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