Recovery from the recent economic and financial crisis that threatened the countries of the Association of Southeast Asian Nations (ASEAN) is underway. As a result, this market of approximately 500 million people, again, is offering tremendous opportunities to U.S. exporters and investors.

Association Promises Regional Stability

ASEAN was formed in 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand to promote political and economic cooperation and regional stability.

Brunei joined in 1984, and Vietnam in 1995. Laos and Burma were admitted into full membership in July 1997. Cambodia became the tenth member in 1999.

ASEAN commands far greater influence on Asia-Pacific trade, political, and security issues than its members could achieve individually. Its success has been largely based on its use of consultation, consensus, and cooperation. U.S. relations with ASEAN have been excellent since its inception.

ASEAN Offers Sound Export Destinations

In 1999, the United States exported about $38 billion in goods and services to ASEAN, which has a gross domestic product of $600 billion. Within the larger ASEAN markets, U.S. exports to the Philippines were up by 6.5% since 1998, while those to Singapore and Indonesia edged up slightly, expanding by 2.8% and 1.7%, respectively. Exports to Malaysia were down by 3.9%, and those to Thailand fell 6.3%.

Foreign Investment Needed for Recovery

While ASEAN nations recognize that further liberalization of trade is required, they independently pursue support, cooperation, and investment from the private sectors of the major countries. And they understand the need to retrain and retool their work forces.

With nearly two decades of building strategic alliances and working relationships, the U.S.-ASEAN Business Council has become the premier private organization in the United States representing the ASEAN private sector. The Council is committed to promoting U.S. competitiveness in this dynamic global growth market.

Singapore Is Important

Of the ASEAN nations, Singapore imports the most from the United States. This is largely due to its status as a transshipment point for the rest of Southeast Asia. Additionally, it is one of the most highly developed and sophisticated industrial, commercial, financial, and consumer economies in the world.

The United States remains Singapore’s largest investor, accounting for 44% of total foreign investment commitments in 1998.

An Important Gateway

Singapore is also an excellent market (and test market) for U.S. products. Its role as one of the principal gateways to Southeast Asia typically offers American manufacturers distribution through interested local buyers or regional buyers in other Southeast Asian countries.

Shipments from the U.S. to Singapore were about $16.5 billion in 1999. This primarily included electronic equipment, electrical machinery, aircraft and parts, optical, photographic and measuring devices, and plastics.

Singapore levies minimal import duties and presents no significant non-tariff barriers to trade. Analysts of the Singapore economy are unanimous in their prognosis that the economic outlook has brightened considerably since the beginning of the year, notwithstanding the significant challenges that remain.

Malaysia Struck Hard by Crisis

After nearly a decade of strong economic growth averaging 8.7% annually, Malaysia was hit hard by the regional financial and economic crisis of 1997-98. But signs of recovery are appearing. Its economy is expected to have generated positive growth in 1999 after having contracted by 7.3% in 1998.

Despite the regional economic downturn, Malaysia remains an important trading partner for the United States. In 1999, U.S. exports to Malaysia totaled about $9.1 billion. Malaysia remains attractive for foreign investment in the petrochemical industry and for electronics export manufacturing. Most sectors of the economy are widely open to trade.

U.S. Investment in Malaysia Considerable

U.S. direct investment in Malaysia is concentrated in oil and gas, followed by manufacturing, primarily semiconductors and other electronic products. According to Department of Commerce statistics, U.S. investment was $6.2 billion in 1998.

Trade and investment prospects remain strong in infrastructure, information technologies, industrial automation and process control equipment, medical and health products and services, education, human resource development, and furniture and environmental engineering.

With the return of stability and growing optimism, Malaysia’s highly trade-oriented economy has started to reverse its course.

Philippine Economy Shows Modest Growth

The Philippine economy has now turned the corner on the Asian financial crisis and is experiencing modest growth. U.S. exports to the Philippines, which represented nearly 23% of total Philippine imports in 1998, are projected to increase this year. For U.S. exporters, this is a good time to pursue business opportunities in this market.

Despite an overall 16% decline in foreign direct investment in the Philippines in 1998, the U.S. is the largest foreign investor in the country with a cumulative equity investment of $2.72 billion in 1998. This accounted for nearly one-third of the country’s total foreign direct investment.

Exports Increased in 1999

Compared to other Southeast Asian nations, trade with the Philippines recovered quickly in 1999. U.S. exports to the Philippines were about $7.2 billion in 1999, up from approximately $6.8 billion in 1998.

Leading U.S. export sectors to the Philippines include telecommunication equipment, information technology, power plant equipment and services, food processing equipment, building products, and hotel and restaurant equipment.

Sectors offering the greatest investment potential for U.S. firms are electronics/semi conductor assembly, energy (including the power generation industries), franchising, and information technology.

ASEAN’s Future Is Bright

As 1999 began, there was concern that the Asian crisis which started in 1997 would spread and produce instability. It was widely believed that this would undermine trade between ASEAN countries and the United States.

As 2000 advances, it is apparent that the countries of Southeast Asia have learned from the mistakes that contributed to their economic slump. And, as they strive to grow in security and strength, this will bring greater opportunities to U.S. exporters in the near future.

This article appeared in January 2000. (CB)
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella, a world-recognized author and speaker on global business, competitive strategies, and today's new economic realities, is editor-in-chief of The Manzella Report, and president of Manzella Trade Communications Inc., a strategic communications, publishing and public affairs firm.




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