On Track For Steady Recovery

Japan’s economy is poised for continued moderate recovery, fueled by increasing private consumption, favorable financial conditions and the government’s economic measures. Despite global economic challenges in 2023, exports and industrial production have remained relatively stable due to a reduction in supply-side constraints. Corporate profits have remained high, reflecting an overall improvement in business sentiment. Japan’s stock market made historic gains in 2023.

The tourism sector in Japan has been a standout performer, demonstrating steady growth in 2023. The country welcomed around 22.3 million visitors from January to November 2023, according to Japan National Tourism Organization. The boost in tourist arrivals was supported by a resumption in international flights to 80% of pre-pandemic levels, as demand from Southeast Asia, North America, Europe and Australia grew.

Looking into 2024, Japan’s economy is expected to sustain growth, primarily driven by robust domestic demand. The yen, having weakened in 2023, may strengthen against the US dollar if the Bank of Japan rapidly normalizes its monetary policy, according to financial services group Nomura. Promising sectors include semiconductor production equipment exports, benefiting from the bottoming of the inventory cycle and peaking U.S. interest rates. Domestically, growth opportunities are evident in sectors such as systems and applications, real estate and food, says Nomura.

While the positive trajectory is encouraging, the Japanese economy faces headwinds from the slowdown in foreign economies, global monetary tightening and concerns about the Chinese economy. Additionally, geopolitical tensions and market volatility continue to be downside risks.

In navigating uncertainties, corporate leaders are adopting innovative strategies to sustain growth. Akihiro Teramachi, Chairman and CEO of THK, emphasizes the importance of flexibility and having the right mindset in capitalizing on business opportunities amid the ongoing wave of change. THK’s approach involves integrating hardware and digital technologies into manufacturing processes and end-products, particularly for the automotive, robotics, semiconductor and electronic component sectors. The company’s linear motion components, for example, can be incorporated into electric cars, making them energy-saving, energy-efficient, compact and powerful. Such solutions could have a substantial impact on the growth of Japan’s automotive industry.

Beyond profits, businesses are recognizing the significance of corporate social responsibility. Soy sauce maker Kikkoman, with a history spanning over 300 years, is committed to being a good corporate citizen. Honorary CEO and Chairman of the Board Yuzaburo Mogi highlights the company’s dedication to working with local communities for the long term. Kikkoman has pledged a total of US$5 million to the University of Wisconsin to advance research into sustainable crop cultivation and the environmental conditions of the Great Lakes water system.

Seiko Epson is also making headway in realizing its Environmental Vision 2050, staying true to the spirit of its founders in protecting the local environment. The company aims to become carbon negative and eliminate the use of non-renewable underground resources such as petroleum and metal ores by 2050. As a global printing leader, Epson came up with the Dry Fiber Technology, a paper recycling process that preserves water and wood resources and reduces carbon dioxide. Epson’s long-standing dedication to efficient, compact and precise innovation is ingrained in its DNA, reflecting both technological prowess and a strong commitment to reducing environmental impact.

In the face of global challenges, Japan’s economy remains resilient, fortified by the dynamism of its corporations and a sustained commitment to innovation.

Indonesia: A Wealth Of Opportunities

Indonesia’s economy continues to record growth in the third quarter of 2023, with gross domestic product expanding by 4.94%, primarily driven by strong private consumption. Investment continues to demonstrate a noteworthy performance, with a growth rate of 5.77% in the third quarter, surpassing the 4.63% recorded in the second quarter. While the growth of real exports has decelerated due to softer external demand, the services exports sector maintains its momentum, propelled by a surge in international travelers.

Given these dynamics, Indonesia’s Finance Minister Sri Mulyani Indrawati anticipates that economic growth for 2023 will hit 5.04%, with expectations of acceleration in 2024.

Promising Destination for Investors

With its abundant natural and human resources, coupled with anticipated robust economic growth and diverse potential, Indonesia emerges as a promising destination for investors. President Joko Widodo affirmed the nation’s commitment to fostering a conducive and competitive investment climate during the 2023 Asia-Pacific Economic Cooperation (APEC) Summit.

Key investment opportunities lie in priority sectors, notably the industrial downstream sector. Capitalizing on its large nickel reserves, Indonesia harbors ambitious plans for the expansion of its electric vehicle industry. In just three years, Indonesia has inked agreements worth more than US$15 billion for battery and electric vehicle production with multinational manufacturers. The country aims to produce 600,000 electric vehicles by 2030, kicking off production next year.

The energy transition sector stands as another pivotal area that requires investment, knowledge and cutting-edge technology. Indonesia currently boasts a renewable energy potential of 3,600 GW and is actively engaged in the development of a Green Industrial Park covering 30,000 hectares. Moreover, Indonesia’s new capital city, Nusantara, presents diverse investment opportunities across sectors such as infrastructure, transportation, technology, education, energy, finance, tourism, health and housing.

Against this backdrop, the president urged investors to seize opportunities more aggressively and quickly, emphasizing that the current environment presents an ideal time to invest in Indonesia.

Startup Ecosystem Has Room to Grow

In the realm of digitalization, the country has fostered a vibrant tech ecosystem, producing multi-billion-dollar tech platforms, super apps and tech startups. A leading investor in the tech startup space is Alpha JWC Ventures. The Indonesia-based venture capital firm has established a remarkable track record for grooming some of the region’s most successful tech companies. Despite a sluggish global economy that has led to declines in tech company stocks, the region, and in particular Indonesia, continues to attract heightened interest from international investors, according to the venture capital firm.

Compared to mature markets like Silicon Valley or Europe, ASEAN’s tech industry and its startup ecosystem have plenty of potential to grow. In the long term, Alpha JWC’s vision is to help place Indonesia and the wider ASEAN region firmly on the global tech scene.

Manufacturing Sector a Driving Force

In the meantime, Indonesia’s manufacturing sector continues to stand out as one of the primary contributors to the national economy. An exemplary player is Jakarta-based paint and coating manufacturer, PT Mowilex Indonesia (Mowilex), which has effectively maintained its position as one of the market leaders in the country. Niko Safavi, CEO of Mowilex, says, “What has enabled our company to remain competitive in an industry dominated by multinationals and strong domestic players is not only our environmental stance or thought leadership, but also our relentless pursuit of delivering high-quality products to the market.”

The company was the first domestic paint and coating manufacturer in Indonesia to produce water-based paints in the 1970s, back when lead-based and solvent-based paints, known for their potential long-term health risks and emissions, were widely used. More recently, Mowilex has reinforced its commitment to environmental sustainability by launching Indonesia’s first plant-based paint, reflecting its aspiration to be at the forefront of eco-friendly innovation.

Another manufacturer driven by a culture of innovation is PT Nippon Indosari Corpindo Tbk. (Indosari), the company behind Indonesia’s leading bread brand, Sari Roti. Within the manufacturing sector, the food and beverage industry stands out as one of the engines of growth in the country, and Indosari has demonstrated resilience by deliver ing profits amid challenging conditions.

The company plans to work with a leading milk producer to enter the beverage category with a new product, Sari Choco Milk. It will also expand into the spreadable space with Choco Spread, as it seeks to enrich its product portfolio and reduce its reliance on packaged bread.

Coal Exports Continue to Surge

Notably, Indonesia’s exports of thermal coal surpassed 413 metric tons over the first 10 months of 2023, cementing its position as the world’s largest coal exporter. This marked an impressive 11.5% surge compared to the same period in 2022, reflecting that coal exports remain a cornerstone of Indonesia’s economic momentum. Geo Energy Resources, a low-cost coal producer in Indonesia, has recently made strategic investments to increase its coal reserves, ensuring the sustainability of its business for the next 20 years. The low sulphur and low ash content of its coal reserves will attract strong demand from domestic and international markets, particularly Asia, and command a premium above market price, the company says.

As Indonesia strides forward, balancing innovation across sectors with traditional strengths in global trade, it solidifies its standing as a formidable force on the world economic stage.

The Philippines: A Nation Rising

The Philippines stands as one of the fastest-growing economies in Southeast Asia, showcasing a resilient recovery in the aftermath of the pandemic. The country achieved a remarkable gross domestic product (GDP) growth rate of 7.6% in 2022, the fastest growth rate in over four decades. While the first half of 2023 saw some moderation with a GDP of 5.3%, the economy is poised for a renewed upswing with an expected growth rate of up to 6% next year, according to the International Monetary Fund (IMF).

Bangko Sentral ng Pilipinas, the central bank of the Philippines, has acted decisively in raising interest rates in the face of inflationary pressures, which has helped maintain economic stability. Against this backdrop, IMF anticipates faster economic growth in the upcoming year, driven by increased government spending. Notably, service exports are expected to perform well, particularly in the electronics sector, further fueling economic expansion.

Since the post-pandemic reopening of the economy, trade activities and volume have exhibited steady growth, contributing to the Philippines’ economic recovery. Manila-based International Container Terminal Services, Inc. (ICTSI) had a role in this recovery as a major player in the global value chain, providing value-added services and facilitating the free flow of goods between nations and regions.

The global port operator is investing PHP15 billion (US$263 million) to expand the Manila International Container Terminal (MICT). This expansion project will increase the terminal’s cargo handling capacity, enabling it to accommodate larger container ships and the associated increase in cargo volume. Upon completion, the MICT is expected to have an annual capacity of 3.5 million TEU, solidifying its position as the largest international gateway in the Philippines.

Investment Opportunities
The Philippines remains an attractive destination for investment, offering a combination of incentives, tax breaks and well-established legal frameworks designed to protect the interests of foreign investors. President Ferdinand R. Marcos Jr. emphasizes that the Philippines is “a nation on the rise, ready to collaborate with partners who see the potential we hold.”

For instance, the recent collaboration between the Philippines’ Federal Land, Inc. and Japan’s Nomura Real Estate Development Co., Ltd. is set to redefine real estate standards, creating a dynamic new player on the global real estate scene. The synergistic alliance, dubbed Federal Land NRE Global Inc. (FNG), takes advantage of Federal Land’s legacy of innovation and ingenuity enhanced by Nomura’s celebrated history of excellence and attention to detail.

Banking on a considerable capital investment of approximately PHP48 billion (US$844 million), FNG is poised to launch its first two pioneering projects, further solidifying this alliance’s significance on the international stage. These ambitious developments are expected to lead to substantial yet sustainable economic opportunities. With the goal of generating around 6,000 jobs within its initial operational years, FNG will be contributing to the country’s growth momentum in a major way.

Another real estate player capitalizing on the heightened demand for both residential and commercial properties is Vista Land & Lifescapes, Inc., one of the leading integrated property developers in the Philippines. The company has launched a portfolio of projects throughout the country valued at PHP24.3 billion (US$427 million), more than the previous year.

Vista Land reports a consistent and robust demand for its residential developments, encompassing both horizontal and vertical segments. Notably, this demand comes from overseas Filipino buyers, constituting about 60% of the company’s total sales. Its most ambitious project to date is Villar City, a sprawling 3,500-hectare mixed-use development that spans 15 cities and towns in Metro Manila and Cavite.

Tech Advancements
Meanwhile, the country’s tech ecosystem is thriving, characterized by a vibrant startup culture and advancements in e-commerce, fintech and digital services.

The Philippines’ leading telco, Globe, has trans formed from a traditional telecommunications entity into a technology powerhouse, unveiling a broad range of innovative digital solutions aimed at elevating the quality of life for Filipinos. For instance, Globe has rolled out game-changing digital solutions such as finance app GCash, which has transformed the way Filipinos make financial transactions, from payments and savings to loans and investing.

The company is also revolutionizing healthcare with its healthtech offering, KonsultaMD. This digital health superapp allows patients to consult with a vast network of 1,000 medical professionals across 40 specializations, offering roundthe-clock access to doctor consultations, medicine delivery, at-home diagnostics and nursing care.

Sustainable Energy Future
The Philippines is also aggressively pursuing the expansion of renewable energy, aiming to achieve a 35% share in the power mix by 2030, and consequently up to 50% by 2040. To achieve these targets, the government has opened the doors to 100% foreign ownership of renewable energy projects in the country, spanning exploration, development and the utilization of solar, wind, hydro and ocean energy sources.

This forward-looking approach sets the stage for a sustainable and eco-friendly energy future, contributing to the nation’s growth and environmental well-being.

Malaysia: A Sustainable Growth Journey

Malaysia’s economy expanded by 3.3% in the third quarter of 2023, according to advance estimates by the Department of Statistics Malaysia, up from 2.9% in the second quarter. This growth is primarily driven by the services sector, notably in wholesale and retail trade, transportation and storage and business services. The construction sector saw modest growth, while agriculture rebounded slightly after a previous decline.

In the first half of 2023, Malaysia attracted a total of RM132.6 billion (US$27.8 billion) in approved investments across services, manufacturing and primary sectors, according to the Ministry of Investment, Trade and Industry. Domestic direct amounting to RM69.3 billion (US$14.5 billion). Foreign direct investments totaled RM63.3 billion (US$13.2 billion), with the largest inflows coming from Singapore, Japan, the Netherlands, China and British Virgin Islands. This is attributed to the government’s probusiness policies, strategic location in Asia, trusted ecosystem for supply chains and talent and growing innovation capabilities.

Toward a Greener, More Prosperous Future

In July, Prime Minister Anwar Ibrahim unveiled the Madani Economy Framework, a comprehensive roadmap geared to drive sustainable growth and enhance the overall well-being of the people. This initiative has come at a crucial time, serving as a strategic response to bolster Malaysia’s economy amidst a backdrop of a global economic slowdown and ongoing geopolitical uncertainties.

Central to Madani is the principle of sustainability, underscoring the importance of responsible progress in energy transition and sustainable development. Malaysia is on the path to achieving net zero emissions by 2050, as outlined in the National Energy Transition Roadmap. This transition involves shifting away from a traditional fossil fuel-based economy toward a high-value economy, aligning with the nation’s commitment to environmental stewardship and a greener, more prosperous, future.

PETRONAS, Malaysia’s national energy conglomerate, has aligned its business goals with the nation’s vision as well as global sustainability principles. In fact, carbon reduction has been its pursuit for a decade. Since 2013, PETRONAS has cumulatively reduced 18.1 million tonnes of carbon dioxide equivalent (MtCO2e) of greenhouse gas (GHG) emissions from the implementation of decarbonization activities throughout PETRONAS Group-wide operations.

Building on this momentum, the company has set its own pathway to net zero emissions by 2050 (NZCE2050 Pathway), with clear and solid short-, medium- and long-term targets. PETRONAS is racing to decarbonize to meet these targets, starting with aiming to cap GHG emissions at 49.5 MtCO2e by 2024, covering Scope 1 and Scope 2 emissions for its operations in Malaysia. Additionally, PETRONAS aims to enhance its role in energy transition by focusing on both energy security and the responsible delivery of energy solutions. “It is our commitment to deliver our ‘Amanah,’ or trust, to safeguard and manage the nation’s hydrocarbon resources responsibly for the people and the country,” says Datuk Bacho Pilong, Senior Vice President of Project Delivery and Technology, PETRONAS.

Digitalization Crucial to Economic Growth

The digital economy is another crucial pillar of economic growth under the Madani Economy Framework. It is one of the fastest growing sectors in Malaysia, representing 23.2% of the nation’s gross domestic product (GDP). Malaysia Digital Economy Corporation (MDEC), the nation’s lead digital economy agency, has been leading Malaysia toward becoming a globally competitive digital nation through the development and execution of the Malaysia Digital initiative, which aims to ensure that people, global companies and investors will conduct business in Malaysia.

“The idea of Malaysia Digital is to attract good, purposeful and contextual digital opportunities that will be strategic to Malaysia,” says Mahadhir Aziz, CEO of MDEC.

“Additionally, we aim to create local champions and drive the digitalization of Malaysian society, starting with businesses and eventually extending to individuals. This is the crux of Malaysia Digital—we are here to do business, so we invite global giants to invest in Malaysia.”

One remarkable tech champion leading the charge is Silverlake Axis, an enterprise technology, software and services company that has been intensifying its efforts toward developing innovative financial solutions to facilitate the digitalization journey of the financial services sector.

With the ongoing disruption caused by next-generation technologies, such as cloud computing, artificial intelligence, big data and machine learning, Silverlake Axis has expanded its capabilities and expertise to better serve its clients and secure a competitive advantage in the ever-evolving landscape. The company has a strong presence in Southeast Asia and serves 40% of the top 20 largest banks in the region.

Innovation Increases Global Competitiveness

Meanwhile, innovation remains a priority as Malaysia strives to compete on the global stage. The nation is committed to intensifying its efforts in nurturing local innovation and technological advancements, with the overarching goal of establishing itself as a formidable global contender.

BookDoc, a local healthtech startup, has innovation at its core. Initially established to help individuals find healthcare providers, the company has evolved into a prominent player in the area of corporate wellness programs. These programs cover physical wellness, mental wellness, nutrition and teleconsultations. What’s different about such programs is the use of smart technology to gamify healthy behavior while incentivizing individuals through personalized rewards schemes—all through its superapp.

Over the years, BookDoc’s corporate wellness program has gained significant traction, finding adoption among large multinational corporations. With the corporate wellness solutions market projected to reach US$94.6 billion by 2026, there are plenty of opportunities for BookDoc to seize.

All this bodes well for the overall economy. As Malaysia aims to become one of the world’s top 30 largest economies in the next decade, the implementation of the new economic reforms will bring it closer to achieving this goal.

Singapore Retains Competitive Edge

As one of the most competitive economies in the world, Singapore continues to build on its strong financial system, market efficiency and macroeconomic stability. The city-state has been ranked fourth out of 64 economies in the 2023 World Competitiveness Ranking by the International Institute for Management Development (IMD), based on economic performance, government and business efficiency, as well as infrastructure. Although it slipped a rank from the previous year, Singapore remains the most competitive economy in Asia, ahead of Taiwan and Hong Kong.

In the wake of a rapid economic rebound from the pandemic in 2022, Singapore’s economy registered a 0.4% year-on-year growth in the first quarter of 2023. This growth, albeit moderating from the previous quarter’s 2.1% expansion, signifies the nation’s resilience. In the second quarter of 2023, the economy expanded by 0.5% year-on-year, mainly supported by the transportation and storage, other services, and information and communications sectors, according to the Ministry of Trade and Industry (MTI).

Like many economies, Singapore is not immune to the challenges posed by the slowing global economy and geopolitical tensions, coupled with tightening financial conditions. The MTI anticipates the nation’s GDP for 2023 to fall within the range of 0.5% to 1.5% as external demand remains subdued.

Despite this muted growth forecast, bright spots remain as some sectors are showing signs of recovery. The growth outlook for aviation- and tourism-related sectors such as air transport and accommodation remains positive, given the ongoing recovery in international air travel and inbound tourism. Consumer-facing sectors such as retail trade and food and beverage services are also expected to continue to expand, bolstered by resilient labor market conditions and the resurgence of inbound tourism.

Global Expansion Through Singapore

As a leading trade center, Singapore consistently attracts foreign investment due to its global connectivity, pro-business environment, exceptional infrastructure and a highly skilled workforce. Singapore stands out as the preferred destination for multinational corporations seeking to put down roots in the region.

Among them is SHEIN, the global fashion and lifestyle juggernaut with 11,000 employees based in key centers around the world including Singapore, the U.S. and Ireland. SHEIN’s global expansion is being led out of Singapore due to its strong governance and access to key markets in the region, among others. “SHEIN’s decision to be headquartered in Singapore is a testament to our belief in its vibrant ecosystem and alignment with our global vision,” says Leonard Lin, SHEIN’s Global Head of Public Affairs and Singapore General Manager. “Our commitment to Singapore goes beyond our business operations, and is also reflected in our continuous efforts toward engaging with the community, nurturing local talent, and fostering a sustainable fashion ecosystem right here in the heart of Asia.”

A Vibrant Fintech Landscape  

Meanwhile, Singapore’s fintech sector has expanded significantly, backed by a strong regulatory environment and digital infrastructure. The Monetary Authority of Singapore has recently announced a fresh round of funding over the next three years to boost the sector. The S$150-million (US$111 million) funding program aims to accelerate fintech innovation, particularly in areas such as artificial intelligence, data analytics and regulatory technology (regtech). 

The thriving fintech sector, showcased through events such as the annual Singapore Fintech Festival, cements the city’s role as a prime hub for fintech innovation. The diverse range of fintech entities, coupled with abundant venture capital investment opportunities spanning various funding stages, further solidifies Singapore’s position as the preferred destination for foreign fintechs seeking ASEAN market expansion and global recognition.

Take for instance, Surfin Meta, a Singapore-based fintech founded in 2017 with a mission to drive financial inclusion in emerging markets. The company selected Singapore as its base to better serve the markets in the region. It made a notable entry into Indonesia in 2018 with an online personal loan platform, and rapidly expanded its operations to Vietnam, Mexico and the Philippines in the same year. Today, Surfin Meta operates in 10 markets, serving 35 million unbanked and underserved users.

Wealth Management Excellence

The growth in global wealth in recent decades has contributed to the rise of family offices around the world. Many wealthy families are turning to professionally run family offices to help them manage their wealth and secure their legacies. As a global financial hub, Singapore has benefited from this trend, with some 1,100 single-family offices established in the country at the end of 2022.

Bank of Singapore, the private banking subsidiary of OCBC, has emerged as a major player in the family office segment in Singapore, managing more than a quarter of the 700 single-family offices established in Singapore at the end of 2021.

“Singapore’s status as an international financial center is key to its allure. With excellent global connectivity, a deep pool of skilled professionals in wealth management and a supportive tax environment, it serves as the ideal gateway to regional investment opportunities,” says Robin Heng, Bank of Singapore’s Global Market Head for Philippines, Australia, Indonesia, Thailand and Indochina.

The bank has a dedicated Family Office Advisory team that focuses on understanding clients’ needs and tailoring plans accordingly. As demand continues to grow for family offices in Asia, Bank of Singapore aims to enhance its offerings and expand its footprint in the wealth management space.

Prospects in Real Estate

Singapore’s growing number of high net worth individuals (HNWIs) has spurred activity in the real estate sector. Strata-titled offices and conservation shophouses stand out as attractive investments for HNWIs and family offices.

Homegrown boutique agency Brilliance Capital has emerged as a strong player in this segment, offering tailored real estate investment services for wealthy families, institutional investors and publicly listed companies from around the region. The firm, led by Executive Director Sammi Lim, has chalked up an impressive list of transactions since its inception three years ago, including the sale of a suburban mall for S$220 million (US$162.3 million), among others. 

Despite the prevailing market uncertainties, Lim believes that Singapore’s strong fundamentals and resilience will position it favorably against its regional peers. She anticipates that well-funded institutions, family offices and HNWIs with longer-term investment horizons will remain active in the market.

Looking ahead, Singapore’s journey as a competitive economic powerhouse continues to unfold. Despite global challenges, the nation’s commitment to innovation, diversification and adaptability fuels optimism for sustained growth.

Thailand: Riding The Growth Momentum

Thailand is well on the road to economic recovery after recording a GDP growth of 2.6% in 2022. The positive momentum has carried into the first quarter of 2023, surpassing expectations. In Q1 2023, the Thai economy expanded by 2.7% year-on-year, supported by the rebound in tourism and private consumption.

Traditionally reliant on tourism, Thailand has received a much-needed boost with the return of international visitors, especially from China, following the country’s reopening. In the first quarter of 2023 alone, approximately 6.5 million tourists visited Thailand, with the Tourism Authority of Thailand aiming to attract 25 million foreign tourists by year-end.

Taking Travel to Greater Heights

The country’s flagship carrier, Thai Airways (THAI), is well positioned to support this tourism revival. With a vast network spanning 47 international destinations, including prominent European cities such as London, Paris, Frankfurt, Munich, Zurich, Stockholm and Copenhagen, THAI is further expanding its reach by reintroducing direct flights from Milan and Oslo by early 2024, after a temporary suspension due to the pandemic. With more direct flights, travelers get to enjoy uninterrupted journeys to Bangkok, avoiding time-consuming and tiring layovers and connections.

Recent investments in new wide-body aircraft such as the Airbus A350-900 and Boeing 787 guarantee a comfortable and spacious onboard experience. From its roomy business class seats and personalized services to the extensive menu of high-quality Thai cuisine and a wide range of inflight entertainment options, THAI ensures that travelers have a seamless and enjoyable journey. This combination of comfort, convenience and true hospitality has contributed to its success as the choice airline for many discerning travelers.

Another local company looking to support the growth of the tourism sector is TRAViZGO, Thailand’s pioneering travel tech startup. After more than two decades in the travel market, TRAViZGO is ready to scale new heights with its recently launched TRAViZGO Super App. To cater to the needs of the modern consumer, the app offers a wide range of travel-related services from booking and managing flights, accommodation and transportation to package tours and travel insurance—all within a single platform.

TRAViZGO has also been working closely with the Tourism Authority of Thailand to further promote the country to international visitors. Last November, the company collaborated with the Digital Economy Promotion Agency (depa) to develop a business-to-business online platform that connects tourism service providers in Thailand with travel agents worldwide. The platform opens new opportunities for local players, especially small businesses, to expand their market reach by tapping into new customer segments and geographic markets.

Staying Committed to Sustainability Goals

Amid this economic expansion, Thailand remains committed to its sustainability goals. As the second-largest economy in Southeast Asia, Thailand has made significant strides in achieving the UN Sustainable Development Goals (SDGs). Furthermore, the country’s bio-circular green (BCG) economy model, developed in 2021 and aligned with the UN SDGs, has gained greater prominence as Thailand contributes to global efforts to address environmental challenges and promote sustainability.

Thai corporations and businesses actively support Thailand’s sustainability and net zero targets. Among them is Indorama Ventures, the world’s major polyethylene terephthalate (PET) resin producer and recycler, the plastic commonly used for beverage bottles. One of the largest petrochemical companies in the world, Indorama Ventures set up its Environmental, Social and Governance (ESG) Council to explore ways the company can implement sustainability initiatives across its business segments. Through its Vision 2030 plan, the company aims to achieve a 30% reduction in Scope 1 and 2 combined greenhouse gas (GHG) intensity, a 15% reduction in energy intensity, a 20% reduction in water intensity, 25% use of renewable electricity and more.

In 2022, the company established Indorama Ventures Investments & Holdings as a startup business incubator to identify and invest in projects with advanced technologies and innovations, including bio-based materials. The company plans to invest more than US$7 billion to increase recycling capacity, decarbonization and bio-based feedstock to 2.4 million tons by 2030. These targets are aligned with Thailand’s BCG economy model and the UN SDGs.

Another industry leader, Thai Beverage Public Company Limited (ThaiBev), the largest beverage company in Thailand and one of the largest in Southeast Asia, is also leading the charge in the sustainability journey. The company’s ESG commitment is largely inspired by the late Thai King Bhumibol Adulyadej’s Sufficiency Economy Philosophy, a principles-based framework that promotes balanced development with respect to the environment, economy, community and local culture.

As clean water is the most important natural resource for the beverage manufacturing industry, ThaiBev is committed to water conservation initiatives and aims to achieve 100% water replenishment by 2040. In the area of packaging, the company ensures that its products create minimal carbon footprints. It also aims to achieve packaging circularity and has been active in reusing and recycling its bottles. These are just some of the company’s efforts that are part of its “Enabling Sustainable Growth” strategy, designed to drive resilience across its business, while protecting the environment, supporting local communities and practicing good corporate governance.

Positive Outlook

Looking ahead, the Office of the National Economic and Social Development Council (NESDC) forecasts that the Thai economy will expand between 2.7% and 3.7% in 2023, driven largely by the ongoing recovery of the tourism sector, rising private consumption and expansion in both private and public investments.

Thailand’s economic priorities for the remainder of the year include fostering the export sector, stimulating private investment, catalyzing the recovery in tourism and related service sectors, supporting agricultural production, and advancing initiatives in the Eastern Economic Corridor and other special zones, among others.

Japan: A New Way Forward

Japan is ushering in a “new form of capitalism” to reinvigorate its economy after more than two years of closed borders due to the pandemic. Japanese Prime Minister Fumio Kishida’s new economic policy, unveiled last June, aims to achieve a “virtuous cycle of growth and distribution” through public-private partnership. As part of the policy guidelines, the government aims to pave the way for wage growth to offset the impact of inflation and boost investment in technology, startups, human capital and decarbonization.

On the back of these ambitious plans, the government revised its economic growth forecast for fiscal 2023 to 1.5%, up from the previous forecast of 1.1%. The overall GDP is projected to reach 558 trillion yen (US$4.31 trillion) this year, exceeding the pre-pandemic record of 554 trillion yen (US$4.28 trillion) in 2018. Companies are projected to increase investments by 5.0%, with exports and imports set to rise by 2.4% and 2.5% respectively, despite concerns of a global recession. 

Focus on Long-Term Growth and Innovation

Central to Kishida’s economic strategy is incentivizing long-term growth and strengthening Japan’s capacity for innovation, particularly in industries such as biotech, smart cities, artificial intelligence (AI) and space technology. As part of this push to champion innovation, the government is also taking steps to cultivate a world-class startup ecosystem and help local startups succeed on the international stage.

Indeed, Japan has always been a leader in innovation and technology. Japanese companies continue to create maximum value at home while making their mark on the global stage.

Take THK, for example. The global automation giant has set the standard for innovation in factory automation technologies and processes since 1971. Today, the company is leading the way with solutions bolstered by AI and IoT applications, and more than 60% of its sales come from overseas markets.

THK’s latest digital offerings include a customer communication platform that adds value to the purchasing process and an IoT platform that can predict faults in components and automatically minimize malfunctions without human intervention.

Meanwhile, soy sauce manufacturer Kikkoman has penetrated more than 100 countries since its establishment in 1917. Kikkoman Corporation Chairman and Honorary CEO Yuzaburo Mogi attributed the company’s long-term growth and success to the foresight of its top management. He says, “Now, more than ever, it is critical for top management to have a clear grasp of the global business environment and an ability to see ahead.”

Kikkoman aims to keep expanding in Asia, South America and eventually Africa in the next decade. 

Global expansion is also on the agenda of Japanese advertising firm ADREX, founded in 2018. The company’s client-first philosophy, coupled with its business transparency, has contributed to its success. While many young enterprises are focused on immediate profits, ADREX believes in investing in long-term growth. The company celebrated a couple of milestones last year: the launch of its first in-house data analytics tool and the setup of its first overseas base in New York City.

With the domestic economy finally reopening—alongside government support—Japanese businesses are poised for further growth in the year ahead. 

Indonesia Staging A Strong Comeback

Indonesia has proven to be resilient in the face of challenges on multiple fronts, from geopolitical tensions to rising inflation and interest rates. Buoyed by robust demand for its natural resources, a vibrant digital sector and surging foreign investments, Southeast Asia’s largest economy has weathered the global turbulence to put itself back on a growth trajectory.

The country’s economy is expected to grow by 5.4% in 2022, and by 5.0% in 2023, according to a report by the Asian Development Bank (ADB) released in September. The Asian Development Outlook 2022 update notes that robust consumer demand has more than offset lower government spending, while demand for Indonesia’s commodity exports has also been healthy, supporting growth and generating a fiscal revenue windfall.

“The Indonesian economy is coping well with threats to growth. Consumer spending is robust and commodity exports have boomed,” says Jiro Tominaga, ADB Country Director for Indonesia.

Reflecting this growing optimism over Indonesia’s outlook, foreign direct investments spiked by almost 64% in the third quarter of 2022, compared to the same period in 2021, boosted primarily by development of resources processing. Indonesia’s Minister of Investment Bahlil Lahadalia says the economic slowdown in China, one of its biggest partners, would not affect the flow of investment into the country.

A Tech Resurgence

Indonesia’s burgeoning digital economy is also regaining its momentum, driven in part by the country’s technology startups, whose innovative solutions are helping to overcome high distribution costs and provide access to goods and financial services to more Indonesians.

Indeed, amid an uncertain environment for the global technology sector, Indonesia’s startups continue to attract the attention of investors seeking new avenues for returns. In particular, industry watchers believe that the country’s early- to growth-stage investments present an attractive risk-reward profile for investors.

Indonesia is now home to a rising number of tech unicorns such as Traveloka, Xendit and Akulaku; local startups raised US$9.4 billion in 2021, almost three times the US$3.42 billion raised a year earlier. Indonesian venture capital (VC) firms have also been actively investing in the sector, further fueling growth.

One leading investor in the tech startup space is Alpha JWC Ventures, Indonesia’s first independent and institutional VC firm. Established in 2015, the firm’s total assets under management have grown to around US$700 million across three funds. Its portfolio of over 70 companies features four unicorns and 27 centaurs, with valuations of between US$100 million and US$1 billion.

Indonesia has also seen some of Southeast Asia’s most prominent public listings this year, including GoTo Group, the country’s biggest technology company. As of 10 November, the Indonesia Stock Exchange has recorded 54 new listings in 2022, exceeding 2021’s total.

The Return of Travel and Spending

Meanwhile, the lifting of pandemic-related restrictions and the reopening of borders are proving a boon for the country’s hospitality and consumer sectors. Amid this recovery, the first Langham Hotel in Southeast Asia opened its doors in downtown Jakarta.

The ultra-luxurious Langham, Jakarta sits on the uppermost stories of a skyscraper in the Sudirman Central Business District, with upscale shopping and entertainment nearby. Staying true to its roots, the property pays homage to the refined British elegance of the iconic Langham Hotel in London.

Growing confidence in the economy is also giving a boost to consumer spending. Fitch Solutions forecasts real household spending in Indonesia to grow by 4.8% year-on-year in 2022, an improvement from the 2.2% growth recorded in 2021. While household spending will moderate slightly downwards in 2023, growth is expected to remain strong at 4.7% next year.

As the largest and most successful bread company in Indonesia, PT Nippon Indosari Corpindo Tbk. is well-positioned to meet rising demand for its market-leading bread and cake products under its flagship brand Sari Roti.

To capitalize on the buoyant consumer sentiment, the company announced plans to enter the chocolate spread and chocolate milk business, after observing that Indonesian consumers had developed a strong affinity for Sari Roti’s chocolate flavor.

Healthy Demand for Natural Resources

Indonesia’s resources sector is expected to be another beneficiary of the recovering global economy. In particular, palm oil prices are projected to strengthen as demand increases for its use in food and biofuels. Indonesia is a major exporter of the commodity.

The uptick in palm oil is benefitting Indonesian producers such as PT Sumber Tani Agung Resources Tbk (STAA), which has established itself as a leading and sustainable player in the palm oil industry. Founded 50 years ago, the company has leveraged its expertise and experience to consistently deliver superior results to its key stakeholders.

STAA is now venturing into the downstream business to fuel growth, and is constructing a refinery and fractionation plant in Dumai, Riau. Coordinating Minister of Maritime and Investment Affairs Luhut Pandjaitan says Indonesia’s exports could surpass US$300 billion by 2024, as the country regulates the exports of a range of commodities to encourage investment in local downstream industries.

Meanwhile, sustainability has become a priority for many businesses in Indonesia. The country’s largest integrated energy company, Pertamina, is incorporating Environmental, Social and Governance (ESG) factors into its operations as it views ESG and sustainability as fundamental to its future growth.

While threats to growth still abound, Indonesian businesses are riding the economy’s resilience to position themselves for long-term success as the effects of the pandemic fades into the background.

Malaysia On Track For Further Growth

Kuala Lumpur, Malaysia

In its latest report, Bank Negara Malaysia noted that the country saw a stronger growth of 8.9% in the second quarter of 2022 compared to 5% in the first quarter.

It attributed this strong showing to an increase in domestic demand, underpinned by the steady recovery in labor market conditions and ongoing policy support. The central bank also said the higher growth was reflective of normalizing economic activity as the country moved towards endemicity and reopened international borders.

The country’s Finance Ministry said foreign direct investment flowing into Malaysia in Q2 2022 remained positive, totaling US$3.63 billion (RM17.3 billion), buoyed by sectors such as manufacturing, financial and insurance, wholesale and retail trade primarily from the United States and Singapore.

Malaysia’s trade performance has also seen an uptrend. The Malaysian External Trade Development Corporation noted that trade surged by 56.7% to US$55.7 billion (RM265.7 billion) compared to August 2021.

Bright Outlook for Local Companies

As recovery gains momentum, Malaysian companies, such as Silverlake Axis, have also done well and experienced marked growth this year despite the impact of the pandemic. The company has a strong reputation in Southeast Asia and counts over 40% of the top 20 banks and three of the five largest financial institutions in ASEAN among its customers.

But despite its success, the Singapore-listed company has recognized the need to diversify its business and adapt to new market demands. The company is developing cloud-based and software-as-a-service solutions to compete more effectively with newer financial technology companies. It has also successfully made inroads into Thailand with these new products, with Indonesia as its next growth target.

Another company that is diversifying into new business is Gentari, a wholly-owned subsidiary of PETRONAS, which has identified the world’s need for clean energy demand within three important areas: renewable energy, hydrogen and green mobility.

The newly-formed company aspires to be a low carbon hydrogen producer that will supply its hydrogen value chain to industrial, power and transportation customers in domestic and export markets. It has plans to build an overall energy capacity of 30 to 40 gigawatt in key markets by 2030 through utility-scale projects across solar, onshore and offshore wind, and battery storage.

Open for Business

Meanwhile, Malaysia’s international financial center, the Tun Razak Exchange (TRX), has opened its doors to three financial institutions—Affin Bank, HSBC and Prudential Assurance.

The 70-acre development has been benchmarked against the most stringent international standards and offers a unique proposition to potential investors and tenants as it employs biophilic designs, which bring in natural light and better air circulation.

These innovative designs support the future of work, where workers want to be agile and mobile and have seamless connection between outdoor and indoor spaces. TRX also emphasizes sustainability, with 23% of the district dedicated to green and open spaces and where the buildings are sustainably-designed and user-oriented.

Looking forward, Malaysia’s future looks bright following the country’s transition to the endemic phase and the opening of international borders. Its economic growth is expected to be supported by more vigorous economic and social activities, as well as strong domestic and foreign demand.

“While external demand could face headwinds from slower global growth, the Malaysian economy will continue to be supported by firm domestic demand. Growth would also benefit from improving labor market conditions and higher tourist arrivals, as well as continued implementation of multi-year investment projects,” says Nor Shamsiah, Governor of Bank Negara Malaysia.

The Philippines: Ready To Soar Anew

Malls, hotels, restaurants, and construction sites light up with renewed activity in the Makati Central Business District.

Prior to the emergence of Covid-19, the Philippines was already one of Asia’s fastest-growing economies. Now, with post-pandemic recovery well underway, and the tempering of global concerns ranging from fuel to supply chain issues, the outlook for the country’s economy is bright as it looks to regain its momentum and rise to even greater heights.

Positive developments have followed the relaxation of Covid-19 restrictions, thanks to an expanded vaccination program and adherence to health precautions. This has led to a rebound in investments and household consumption.

“Strong retail growth is a bright spot in the Philippines and in the region,” says Frederic C. DyBuncio, President and CEO of SM Investments Corporation. “Despite rising inflation, SM Retail reported its revenues rising by 18% in the first half of 2022.” 

The pandemic has also spurred the adoption of digital and online transactions in the country, leading to a fintech boom. “Digital innovations have made doing business in the Philippines easier, creating a springboard for economic recovery,” explains Nestor V. Tan, President and CEO of BDO Unibank, the Philippines’ largest bank.

Speaking on the property sector, Vista Land & Lifescapes President and CEO Manuel Paolo A. Villar Jr. shared in their H1 2022 earnings report about how the company saw their income grow by 11% from last year, and will continue to upgrade and develop digital initiatives. Having recently launched VistaREIT, their company’s commercial real estate investment trust, Villar remains optimistic about the prospects of a reinvigorated economy.

Official figures show the Philippines’ GDP posted 8.3% growth in the first quarter of 2022, slowing to 7.4% in Q2 due to inflationary pressures. The government expects full-year growth to be between 6.5-7.5%, still among the highest in the region.

With growth accelerating and financial burdens easing, the new administration is confident about the country achieving upper-middle-income status within the next six years.

In its first few months, the Marcos government has highlighted its continued focus on fiscal management and reviving the underutilized agricultural sector. The current team has stated its commitment to not just sustain, but to also expand the previous administration’s ambitious Build Build Build program, keeping infrastructure spending at 5-6% of GDP. By targeting other promising sectors, such as technology, healthcare and education, the goal is to raise the country’s attractiveness as an investment destination.

The latest official statistics show all economic sectors expanding, with growth mostly driven by the services and industry sectors at 9.1% and 6.3%, respectively. Business process outsourcing remained buoyant even during the pandemic and is expected to continue to play a significant role. However, tourism is the sector predicted to rebound most dramatically over the next two years.

Having weathered great storms, both literal and figurative, the Philippines is showing that, with a bit of wind at its back, its economy is ready to again fly forward and upward.