The Gulf is gearing up to tap the vast resources of the ASEAN region.
The 10-nation bloc is expected to become a $10 trillion economy by 2030, dwarfing China’s current $7.2 billion – with the GCC expected to drive large chunk of future South East Asian GDP.
This growing friendship gained further traction recently when Qatar announced it had committed to a $4 billion real estate project in Vietnam along with a joint venture petrochemical complex.
“Qatar Investment Authority is looking at developing joint funds with some of the ASEAN countries to invest in each of them. Thailand recently agreed to import two million tonnes of LNG starting 2015, so I expect Qatar will also invest in a LNG reclassification terminal at the other end in Thailand,” said a senior Doha-based economist based at one of the country’s largest banks.
“And that will open the door for some broader investment in the Thai economy. Qatar tends to do only big projects – it’s opportunistic,” he added.
Qatar has so far dished out capital to the Malaysian financial services industry, Singapore’s hospitality sector, farming projects in Thailand and Cambodia, tourism complexes in Myanmar and Laos and a planned mining project in the Philippines.
The current ASEAN-GCC ‘action plan’ earmarks a number of industries where the regions are increasingly working in tandem, ranging from the obvious – hydrocarbons and food supply – to aquaculture, technology, and environmental techniques.
Asia will become the most important emerging market region for the GCC in the coming years, according to a study by the Economist Intelligence Unit. The total trade between ASEAN and the Gulf was valued at $83.25 billion as per the latest available figures in 2010, up 24 per cent from $67.3 billion in 2009. ASEAN’s exports reached $20.1 billion, while imports reached $63.1 billion.
The Inside Investor Asia Forum, held in Doha, Qatar, last month focused on bringing together industry leaders in both regions, headed up by Qatari government figureheads, Dr Surin Pitsuwan, secretary-general of ASEAN, and Pehin Sri Haji Abdul Taib bin Mahmud, chief minister of Sarawak.
“Qatar has a reputation as a big investor internationally and I came here to give an introduction of what we have to offer,” Mahmud said, surrounded by an entourage of around 15 people, all eagerly extolling the virtues of Sarawak, the largest state in Malaysia.
The chief minister said that while Malaysia is established on the global stage, Sarawak is less known and has different demographics and focuses to the rest of the country.
“We have different stages of development, different geography, and we developed a different way from peninsula Malaysia. As far as economic development is concerned, you cannot have the same model – we have less than one million people so we have to concentrate on exports, such as timber and palm oil,” he said.
“We are now into heavy industries, we are able to give a comparable advantage to energy-intensive industries, with our access to hydros. We are changing: we want to attract aluminium, metal alloys, aquaculture, and palm oil investment. We also want to become a halal hub.”
In 2011, Sarawak recorded GDP growth of 4.2 per cent and the outlook for 2012 is between four to five per cent.
As the government pushes to modernise the state through a multi-pronged infrastructure and industry programme, the chief minister is aiming high: “We would be quite happy to attract $2 to $3 billion more in foreign direct investment.
“We have steadily built our value-add proposition, even though there has been competition with many South Asian countries. Some of them have basic products and their standard is not very high so we don’t want to compete with them; we have high-grade specifications.
“We invest more into technology to produce more sophisticated products. In five years time, our industrial and manufacturing sector will be boosted to more than 35 per cent of GDP, up from the present 23 per cent.”
This is a growing trend across most ASEAN countries, as they gradually shift away from assembling manufacturing and cheap labour facilities, according to a report from Insider Investor.
In the coming years, the ASEAN region will also see the rise of a consumer class of around 100 million people and will become the main source for commodities such as palm oil, rice and rubber.
The GCC is set to play a vital role in this unprecedented boom as oil-surplus countries cherry pick for mutually beneficial investments.
“Economic power has shifted eastwards – to the GCC region and ASEAN countries; we are the focus of global investment now,” Al Khaliji bank chairman and managing director Sheikh Hamad bin Faisal bin Thani al-Thani, told the Doha conference.
Whether South East Asia can ready itself for a single market – the ASEAN Economic Community – by 2015 remains to be seen, but both the GCC and the ASEAN region are making the most of their time in the global economic spotlight in the meantime.