Indonesia - Asean the New Hot-Spot for Foreign Investment

Southeast Asia is becoming an increasingly popular destination for foreign direct investment, especially as other destinations in the region level off, a securities expert said on Monday.

“Foreign direct investment for China is leveling off,” said Amar Gill from Lyonnais Security Asia.

India, has seen a decline as a popular locale for FDI, which some experts attribute to its complex and changing regulatory environment. “In Asean, there has been a rising trend of FDI . . . which roughly tripled in the last few years,” Gill said.

Singapore, Indonesia and Malaysia are seeing the sharpest rise in FDI in the region, he said, adding that disposable per capita income has also been on the rise.

A fast growing middle class, stable political and economic environments and on of the best performing markets in the world has helped raise the amount of disposable income in Southeast Asia, Gill said. The strengthening of currencies in the region, Gill added, has also boosted buying power.

He said that disposable income in most Asean countries accounts for about 60 percent, and with the fast growth shown by the region in the past years, the rise in disposable income will translate into more people entering the category of rich individuals.

“You will see a big growth in dollar millionaires in the next five years. We are looking into the high net-worth individuals doubling,” Gill said.

He said discretionary spending power is estimated to kick in at $3,000 in disposable income — and in Indonesia, the number in that bracket was currently estimated at around 30 percent.

“The number of high net-worth individuals will grow at a compounded rate of 15 percent a year,” he estimated.

He said that Indonesia would see the fastest growth as it started from a lower figure.

The Jakarta Globe

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