You’ve heard of how much China, India and Brazil are growing to be mighty economies. Now there are “rumors” going around of a new growth area. Actually, it’s not new, in fact I’ve mentioned it in “Market Fashions” post in the early part of this year – only just this time, the rumors are getting louder and louder. It seems more and more people are welcoming a SEA change.
SEA…. Is Southeast Asia. Coming from the Philippines, ever since I can remember there has been ASEAN (Association of Southeast Asian Nations), SEA Games (Southeast Asian Games) and even the youth exchange program I was a part of -The Ship for Southeast Asian Youth Program (sponsored by Japan) had its first batch of Goodwill Ambassadors back in 1974. Let’s not get into why they formed this group, let’s say they just formed it like your friendly “neighbourhood association”.
Here’s the CIA World Factbook map to help you get familiar with the area:
Map of Southeast Asia by CIA World Factbook
You can see it is below (south) of Asian powerhouses China, Japan and Korea and above Australia.
What is so special about that?
- First, those countries mentioned are economically advanced in the case of South Korea, Japan and Australia (OECD countries, sorry, another acronym it means Organization for Economic Cooperation and Development) let’s just say they are among the richest countries in the world and of course you know China is the world’s biggest growth story. As mentioned in that blog post, these rich countries have also been needing resources that they need for their growth – and where do they get them? Bingo! Southeast Asia. See, this is the function of the neighbourhood association, you’d have a “give and take” relationship maybe with your neighbours. These rich neighbours need food, things made for them, use hired help, as well as raw materials and the occasional “beach” holiday. So you can say “money is spread around” in these places. Income from these activities were used, fortunately, to build houses, businesses, getting skilled / education, helping these countries develop
- Looking back at that map again, you can see the land and water area. These sea lanes are important transport points especially for oil. (Oil from Middle East travel to Asian ports and US through this route.)
- Also fortunately for this neighbourhood, they already had the “Asian Financial Crisis” and is not as dependent to debt as USA and Europe, the people don’t normally use credit to finance their lifestyles and could also say they are an enterprising lot rather than being dependent on jobs. Making money is perhaps easier to them with “small businesses” because jobs had not been easily available in the first place. You would reckon they will be able to ride out the rough global economy.
- As far as consumption goes, this group of countries have the highest populations in the world (again referring to CIA World Factbook)
The combination of these factors and many others are luring China and US to invest here for growth. Just look back in the flurry of activities by both governments to shore up their “partnerships” even in just the last few weeks and in recent years. And even before China was in the picture, Japan had already planted its foot in these countries.
So as investors, who are looking for protection, income and growth, you might want a SEA change.
Calm Sea of Bohol, Philippines by Ingrid
