At present, Asian economies are on firm economic growth path despite of the fact that developed economies are in doldrums. This noteworthy economy growth has already entered the recovery phase despite of being affected by global recession last autumn, and it is supporting the world from preventing as a global recovery engine thereby preventing it from falling into global downturn.
World Economic Outlook published by IMF in October last year clearly shows Asia as a pulling force of global economy. Although the economic growth of the developed countries was just +2.7% last year, emerging Asia grew at 9.4%. This outlook also expects Asia to become the growth center of the world.
Real GDP of various East Asian countries and regions became 4.85 times of 1980 in 2003, and it has outperform the speed of global average (1.85) times. Especially, the growth of China in recent years is quite noteworthy. By maintaining such high growth rate, GDP of various East Asian countries and regions occupied 8.7% of the world’s GDP.
East Asian countries and regions grew as a production base of Japanese, American and European company. This is one of the reasons why exports from East Asian countries and regions are growing, and their share in worldwide exports is also increasing.
Here, the GDP on purchasing power parity basis for East Asian nations and regions grew to 8.68 times of 1980 in the year 2005, significantly outperforming EU (3.05 times) and NAFTA (3.12 times), which suggests that income levels are rising in East Asian countries and regions. Because of this, consumption in East Asian countries and regions is also likely to expand in future.
Moreover, similar to the expectation of increase in income levels, imports of East Asian countries and regions are also increased and occupied 17.3% share in 2003. Although the imports not only include products for end consumers but also raw material, this remarkable growth in imports shows that East Asian countries and regions are growing as production hubs as well as markets.
On the other hand, the population of East Asian countries and regions was forecasted to occupy 30.0% of world’s population, which is not a major change over the past. In the meanwhile, economy is growing remarkably as evident from the aforementioned GDP share. Although East Asian Countries and Regions didn’t have a large share in global economy compared to their population, after the growth as production hub and market, it can be easily said that they have become an important player in recent years in the global economy.
Changes in population growth in Southeast Asia
Although the population of Southeast Asia exceeded 580 Million people, in contrast to Japan, the population structure is complete pyramid shape, and the percentage of young population in overall population is quite large. Japanese people have already passed the halfway mark of their life, and generation of people that needs to worry about their old age from here onwards has expanded. Against this, most of the people in Southeast Asia will form a family and have children from here onwards, and they must arrange for consumer durables such as house and car in future. Large young population makes Southeast Asian an attractive market.
As forecasted from the projections of United Nations, one of the risk factors is, population of youth in Asia started declining from 2010, and in the next 10 years itself, it will decline from 530 million to 480 million, representing a decline of 50 million or close to 9%. Although decrease in the number of children in China has a large impact, not only Japan and Korea, trend in Southeast Asia has substantial impact. In other words, trend of low birth rates in Japan, Korea, and Hong Kong etc. has expanded to emerging countries as well. Because of this, population of youth in Southeast Asia that was growing so far will start declining after peaking off in 2015. East Asia and Southeast Asia will start facing decline in the population of young people from 2010 onwards.
Along with China and India, Southeast Asian countries are also expected to maintain high rate of economic growth, and for Japanese companies looking at penetrating overseas markets, market of over 500 million consumers will certainly be very attractive as a large consumer market.
Already, many Southeast Asian countries have started recognizing “High Quality” products and services of Japanese companies, which gives them an edge over other overseas companies looking forward to entering the market. However, in order to survive the cut-throat competition, after adequately assessing the characteristics of market, it is important to develop the market with prices and sales approach suitable to economic conditions.
ASEAN symbol.
Economic growth in China and India match
In Asia, major changes are taking place in respect of the economy. The Association of Southeast Asian Nations (ASEAN) concluded Free Trade Agreement (FTA) with India, to create a huge economic area of 1.8 billion consumers. In addition, a few days later, ASEAN organized the economic ministers' meeting in Bangkok, to consider the possibility of forming comprehensive economic collaborations including investments and services without restricting to trade liberalization. This is definitely a proof that changes are taking place.
Southeast Asia has huge geographic advantage. China lies on north, Japan, Korea and Taiwan are on North East, Australia is on the south, while India is on the west, and even further is the middle east. In order to further promote the already expanding trade with each economic zone, construction of new ports is under progress. As a result, companies are trying to produce parts using advanced technologies in order to expand them to rapidly growing China and India.
A quick overlook on the Southeast Asian region tells us that several countries like China, South Korea, India, Thailand, Singapore, Malaysia, Philippines etc are experiencing high economic growth rates. Compared to this, Europe and North America are unable to reset their economies after Lehman shock and for EU no exit is in sight.
For Southeast Asian region that is continuing to produce strong economic performance, it is not hard to image that this region will become a driving force of world economy in the future. Moreover, creating an environment that can effectively mobilize people, money and resources jointly in the Southeast Asia will reinvigorate the economy of Southeast Asia and form ever larger economic region.
Jakarta, Indonesia
The concept of globalization in broad range Southeast Asian countries refers to economic expansion by using the resources efficiently around the world. However, one of the side effects is bipolarization of world, viz. resource-endowed countries and other countries.
Need of the hour for a company is to manage with global perspective and keeping the accelerating presence of Japanese companies in Asia in mind.
In this situation, sophistication of business foundation in Asia and at global level, and the need of creating IT infrastructure, IT strategic management approach and comprehensive management strategy in the region are increasingly required for optimization.
As a part of global management strategy, companies in the developed countries are in the process of creating, integrating and standardizing IT infrastructure based on future business expansion keeping in mind the global management foundation and global IT foundation required to support this in order to survive the global competition.
Today, several cases can be seen where without sticking to conventional approaches many companies have searched and implemented methods that take into account the latest IT trends, not only in quantitative manner but also in qualitative manner.
Although the important point is going to be from here onwards, according to one of the recent theories, a macro trend is definitely there behind the progress of globalization. In this case, sudden reduction of close to 5% in the interest rate by Mr. Greenspan of FRB in the United States is often said to be a decisive factor.
Thailand, Indonesia and South Korea underwent huge damage after Asian currency crisis in 1997. Although IMF came forward to rescue, it was not something that could be evaluated. In other words, it came to light that there was not institution that could rescue in the event of a global crisis.
After that, Asian countries stopped relying on the capital of development countries and reduced the investment level to bare minimum. This stopped that process of globalization that had progressed so far. Had this situation continued, the risk of worldwide recession was extremely high. Share of America in world’s GDP is 30%. Worldwide recession will cause huge damage to America. Therefore, Mr. Greenspan reduced the interest rates significantly for providing an impetus to America’s consumption, which reinvigorated the global economy.
Oil Betonamurandon
Energy issues in the recent years have become very import and serious across the world. Especially, economy and lifestyle of the developed countries rely on fossil energy, and despite of the fact that fossil fuels are finite resources even though they were naturally made over hundreds of millions of years, it is said that they will dry up in the next few decades or so.
Despite of these worries, only energy resources found in Asia include “rare metals”, “mines”, “natural gas", "oil" etc. Most of these energy resources are located in emerging countries and they can not be excavated using the existing technology.
These abundant sources of energy can be developed as global energy hubs instead of restricting only to Asian region.
In the ASEAN heads summit held in Singapore in 2007, policies for supporting nuclear power while moving ahead with the development of renewable energy and alternative energy sources were vigorously debated. It may seem surprising, East and Southeast Asian region is implementing nuclear power projects at the fastest pace in the world today.
There are about 110 nuclear sites currently running, and about 20 sites are under construction, while more than 110 sites are under planning. In addition to these nuclear power plants, experimental reactors are located at 56 sites in 14 countries. The region that is promoting the nuclear power with such vigor is very rare. In the Pacific Rim, only Singapore and New Zealand do not have experimental nuclear reactors. In addition to Japan that tops the list with 55 sites, Korea, China, Taiwan, India and Pakistan are repeatedly conducting various experiments for stable supply of energy.
Among that, Southeast Asia is getting major attention. For example, take Laos. During talking with the Iranian Ambassador, the Deputy Prime Minister of Laos mentioned, “All the countries should aim for a peaceful use of nuclear energy. In addition, their rights should be guaranteed". In the near future, it likely that oil resources may deplete, and sharp rise in oil prices because of this is inevitable. For a developing country like Laos, there is no option but to frantically develop a stable energy source that can replace oil.
