Southeast Asia new markets--new customers: why ASEAN, why now?

• Author: Salov, Alex
• Position: SPECIAL SECTION: World Trade

Southeast Asian countries are sometimes more familiar to adventure travelers than to business people--but they are filled with opportunities for Alaskan companies to do business. Ten of these countries are members of the Association of Southeast Asian Nations--a political and economic union of these nations. The members of ASEAN are: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand and Vietnam.

With a total population of around 600 million and steady GDP growth of 5 percent on average in 2011 (compared to 3 percent or less average growth of developed countries worldwide), ASEAN countries have become one of the most important growing markets for the United States. U.S. exports to ASEAN reached $76.24 billion in 2011 and, if considering ASEAN as a single country, it would be the fourth largest U.S. trading partner after Canada, China and Mexico.

Several ASEAN countries follow an export-led growth strategy with which they identify and focus on specific commodities for export. To do that, they select commodities that can be produced cheaply and with a competitive advantage. For example, Indonesia is a large exporter of minerals and the world's leading producer and exporter of thermal coal (used for power generation). It currently supplies half of China's coal imports. Thailand is becoming a center for automobile manufacturing in Southeast Asia and is among the top ten automobile exporting nations in the world.

Overarching Trends

China is an active player in the ASEAN region. China and ASEAN established a free trade agreement in 2010: the ASEANChina Free Trade Area--the third largest free trade bloc in the world after the European Union and NAFTA. In 2012, ASEAN overtook Japan to become China's third largest trading partner after the EU and the United States. China-ASEAN trade increased 24 percent to $362.3 billion in 2011 and is expected to exceed $500 billion by 2015. According to China Daily, Chinese officials expect the ASEAN region to become China's top trading partner within the next several years.

Members of ASEAN are very diverse in their political, economic and cultural aspects; however, there are several features that most of them share: relatively young populations, urbanization, growing middle class, rapid industrialization and strong demand for infrastructure. These overarching trends make ASEAN members attractive export markets for Alaska.

Let's focus on these trends. As mentioned...