Due to major global crisis events, intensified economic and trade frictions, and regional turmoil, the economic development of major economies in the world has been greatly impacted. This is an impressive economic performance. ASEAN countries have maintained a relatively high economic growth rate in recent years and have become the fifth largest economy in the world. The financial market development levels of ASEAN countries are quite different. The markets of Singapore, Malaysia, and Indonesia are relatively developed, while the markets of Vietnam, Cambodia, Laos, Thailand, and the Philippines are relatively lagging behind. However, Vietnam, as a rising star, has undertaken a large number of transfers from other countries in the world. The transfer of orders has given the country the momentum of the dividend period of China's reform and opening up. In addition, the impression that Southeast Asia used to be a major exporter of energy and many bulk commodities and a production cluster of backward manufacturing industries is gradually changing. The home appliance, electronics and communication industries and even the Internet industry in Southeast Asia are in the process of vigorous development. In this article, we will take a look at the current situation of Southeast Asian countries.
Table of contents
1 Economic performance of Southeast Asia
2 Economic development potential of Southeast Asia
2.3 Investment and Support Policies
2.3.1 Foreign direct investment in the five Southeast Asian countries
2.3.2 Vietnam's investment promotion, tax reduction and exemption policies
3 Trends of industrial transfer
************* Share a few websites that look for international data (trade, climate, economy, etc.) and make visualizations very useful****************
Detailed Country Analysis | WITS | Visualization (worldbank.org)
International trade in goods and services based on UN Comtrade data
The globe of economic complexity (harvard.edu)
Data | resourcetrade.earth | Chatham House
The Atlas of Economic Complexity
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1 Economic performance of Southeast Asia
As an emerging development area in Southeast Asia that attracts the world's attention, the combined population of the five Southeast Asian countries (India, Thailand, Philippines, Vietnam, Malaysia) is less than half of China's, their combined GDP is equivalent to 1/6 of China's, and their total import and export trade is about 40% of China's.
Constant price GDP and year-on-year growth rate of the five major Southeast Asian countries
Trade Statistics between China and ASEAN
The financial markets of Southeast Asian countries have been performing very well since the first wave of economic recovery after the global public health crisis (April 2020). -2021/3) Due to its excellent prevention and control capabilities, industrial production and normal life order are guaranteed, and its performance is also very good. However, due to the continuous mutation of the virus and the great increase in infectivity, it has brought greater challenges to domestic epidemic control. Many industries have been severely impacted, so they performed poorly in the later period. The stock markets of Indonesia, Thailand and Singapore have been performing steadily since the recovery, while Vietnam once achieved a doubling of the index within two years due to the rapid development of the industry. However, due to the poor stability of its financial market, the recent stock market There was a sharp drop.
Comparison of stock indexes of major Southeast Asian countries with CSI 300
2 Economic development potential of Southeast Asia
In recent years, multinational companies in developed countries have begun to gradually transfer labor-intensive industries such as textiles and clothing, which are greatly affected by factors such as labor force, land costs, and environmental protection, as well as labor-intensive production links in other industries, to Southeast Asia, which has more cost advantages. South Asia, Mexico and other places. As the focus of this article, Southeast Asia has excellent production factor endowment in what aspects?
2.1 Labor
China has been the world's largest labor market for a long time, with a labor force of 835 million people. Due to the influence of Confucian culture, East Asian countries, including Chinese people, have the highest willingness to participate in labor in the world. This is a great benefit for many industries. The development of the country provides an important economic endowment - labor force. However, in recent years, the problem of aging in East Asian countries has become increasingly serious. China's birth rate has dropped to 9%, and the median age has reached 38.4 years. It is foreseeable that if the birth rate problem cannot be resolved, China will We will usher in a labor crisis within 20 years, which is naturally contrary to the development of labor-intensive industries. Therefore, in the past 5-10 years, a large number of labor-intensive industries have been transferred from China to other Southeast Asian countries with better labor structure. Among the five countries of India, Thailand, Philippines, Vietnam and Malaysia, except for Thailand, almost no other countries have the problem of population aging. In terms of labor force, they can provide very excellent labor force production factors.
In 2018, the per capita monthly income of Chinese workers was US$807. In Vietnam, until the first half of 2019, the average monthly salary of the labor force reached US$288, while the average monthly salary of ordinary workers was only US$206. However, Vietnam still has policies related to labor protection, and the National Assembly legislates to raise the minimum wage every year. In the past few years, the upward adjustment range was 12% to 13% per year, which caused considerable pressure on enterprises, but it has fallen back in recent years, and the upward adjustment range in 2019 is 5.3%.
At present, many multinational companies have transferred factories in low-end industrial chains such as textiles, furniture and toys to Vietnam, Indonesia, Myanmar and other countries. Baocheng, the world's largest shoemaker, will also move its factories in China to Indonesia and Vietnam. For some time, Vietnam has become an important global garment and footwear production base. By 2020, the Vietnamese shoe industry will account for nearly 80% of the U.S. footwear consumption market.
2.2 Infrastructure
The overall production cost in Southeast Asia has no advantage compared with that in China. We can also see some deficiencies in the current infrastructure in Southeast Asia. The upper limit of future development in Southeast Asia, one of the cores is how to further improve the various infrastructures related to the production field
Comparison of infrastructure data between China and five Southeast Asian countries
In terms of electricity prices, none of the five Southeast Asian countries is lower than domestic electricity prices. In addition, countries such as Vietnam and Thailand in the Indochina Peninsula are facing regular power outages, which further aggravates production instability.
From the perspective of production land and construction costs , since the five countries in Southeast Asia are located in the tropics, limited by higher precipitation and more frequent extreme climates, the investment in infrastructure per unit area is much higher than that in temperate regions, and they need to follow stricter guidelines. safety measures. According to the data released by CBRE, an old American real estate leasing consulting company, in May 2019, in terms of the rental price of completed factories, the average monthly rent in Ho Chi Minh City, the largest city in southern Vietnam, is US$4.1 per square meter. The highest rent is US$8 per square meter; the average monthly rent in the northern Vietnam economic circle (concentrated in Hanoi, Bac Ninh, Haiphong, etc.) is US$3.5-4 per square meter, and the highest monthly rent is US$5.5-6 per square meter. The monthly rent of factories built in Suzhou, China is about US$4.2 per square meter, about US$3.6 per square meter in Dongguan, and about US$2.5 per square meter in Chengdu. With the sharp rise in housing prices in Vietnam in recent years, compared with many places in China, Vietnam has no advantage in terms of rent.
From the perspective of transportation convenience, the industrial production in the five Southeast Asian countries, especially Vietnam, is mainly in the form of industrial parks. The upstream raw materials and spare parts from China, South Korea, Japan and other regions are imported by sea, and the downstream products are transported to the United States, Europe, South Korea and Japan. Then by sea, the proportion of local customers in Southeast Asia is very low, so the logistics structure is highly dependent on sea freight, and the ports are dense. Compared with developed maritime transport, the road and railway infrastructure of the five Southeast Asian countries is backward, and the island structure also hinders the improvement of the coverage of expressways and high-speed rail. In the long run, the role of developed land transportation in the rapid transfer of labor and the synergy of the industrial chain cannot be replaced by sea transportation, and road infrastructure in Southeast Asia still has a long way to go.
From the perspective of digital infrastructure, localized services in Southeast Asia can currently complete the basic installation and network connection, but it is difficult to provide effective technical support at the software level. (Yunqi Capital Research Report)
2.3 Investment and Support Policies
2.3.1 Foreign direct investment in the five Southeast Asian countries
The FDI (foreign direct investment) of India, Thailand, Philippines, Vietnam and Malaysia has been maintained at a relatively high level since 2010. Among them, Vietnam has been steadily increasing year by year since 2006, and its industrial production index has also grown at a relatively high rate.
Net foreign direct investment in five Southeast Asian countries (US dollars)
The year-on-year growth of the industrial production index of the five Southeast Asian countries
China is also an important source of direct investment in Southeast Asian countries. China plays an important role in Southeast Asian economic growth through multiple dimensions such as FDI, trade, immigration, business overseas, and overseas entrepreneurship. The Shenzhen State-owned Assets Supervision and Administration Commission and the Singapore government have all invested in setting up industrial parks in Southeast Asia; large enterprises such as Samsung and Foxconn have also built production bases in Southeast Asia with a scale of 20,000 to 30,000 people. These factories are highly automated and there are many "black light factories".
2.3.2 Vietnam's investment promotion, tax reduction and exemption policies
Another big advantage of Vietnam is the favorable investment promotion policy. Vietnam not only has three special economic administrative zones in Van Don, Quang Ninh Province in the north, North Wenfeng in Khanh Hoa Province in the central part, and Phu Quoc in Kien Giang Province in the south, piloting more open economic and administrative policies, but also various industrial zones and economic zones In addition, Vietnam also implements preferential policies such as corporate income tax reduction and exemption, import tax exemption for some industries, rent exemption and land use to attract foreign investors.
2.3.3 Vietnam failed to imitate China's "land finance" policy, which caused a real estate bubble crisis, and "stabilized real estate" caused market decline
Except for Vietnam, all five countries in Southeast Asia implement private ownership of land. Even for Vietnam, it is still very difficult to learn from China's "land sales + infrastructure + land appreciation" land financial cycle model. The Vietnamese government's investment in infrastructure mainly relies on traditional channels such as fiscal taxation and securities issuance, and land sales only account for a small proportion. In 2021, Vietnam's land use revenue will contribute 10% to fiscal revenue, which is far lower than China's 43%.
But in fact, the real estate bubble in Vietnam is not small. Against the background of the Federal Reserve's frenzied interest rate hikes and the global economic recession this year, Vietnam's property market has been very hot. According to data from the Foreign Investment Agency of the Ministry of Planning and Investment of Vietnam, in the first seven months of this year, Vietnam’s real estate industry attracted US$3.2 billion in foreign investment, second only to the manufacturing industry, a year-on-year increase of 177%, far exceeding the 27% year-on-year growth rate of the manufacturing industry.
Housing prices in Ho Chi Minh City, the largest city in Vietnam, have hit a record high in the past 10 years. In the first half of the year, housing prices have increased by more than 20%, with an average price of more than 35,000 yuan, while the local average salary is only about 2,000 yuan. The housing market is already very deformed. At the same time, at the beginning of the month, Xin Huang Ming Group, a star real estate company that bought the "Land King" at a sky-high price last year, just had an accident. Its chairman Du Yingyong and 6 related people were just accused of "fraud and embezzlement of other people's property" by the investigation agency of the Ministry of Public Security of Vietnam. prosecution, detention. The reason is that at the end of 2021, Xin Huang Ming Group bought the "Diwang" No. 3-12 plot in Thu Thiem New District of Ho Chi Minh City at the end of 2021. It will build Ho Chi Minh City's "Financial City" and benchmark China's Pudong New District ——After discounting the total price, the land is about 680,000 yuan/㎡, and in October this year, the price of Pingliang Community, Yangpu District, Shanghai’s newest "Land King", is only 210,000 yuan/㎡.
The out-of-control housing prices have not only absorbed a large amount of hot money that should have been used for the development of the manufacturing industry, but the loan boom triggered by real estate has also led to a surge in bad debts of Vietnamese banks, and financial risks have continued to expand.
According to data from the Central Bank of Vietnam, the bad debt ratio of Vietnam's banks has risen to 1.9% in 2021, higher than the 1.7% in 2020. As of June this year, the non-performing loan ratio of Vietnam's listed banks continued to climb to 2.1%. Therefore, Vietnam has promulgated a series of new policies on real estate, such as more standardized and stricter bond issuance. This may have a certain impact on the bond issuance of some real estate companies in the short term, so the stock prices of such real estate companies have declined to a certain extent, which has also dragged down the entire market.
2.3.4 "Raw material + industry" policy of Southeast Asian countries, "hold resources, industry makes money"
Southeast Asian countries are paying more and more attention to the local industrial transformation of raw materials, and Indonesia is a typical example. In recent years, the Indonesian government has introduced relevant policies and industrial development plans. By stepping on the brakes on the export of bulk raw materials such as nickel ore, bauxite, tin ore, and palm oil, it is committed to transforming from a raw material exporter to a modern manufacturing country. Recently, Indonesian enterprises with a state-owned background have signed industrialization projects with Ningde Times, the world's first and second largest manufacturer of electric vehicle batteries, and South Korea's LG, with project values of 38 billion and 60 billion yuan respectively. Indonesia is the world's largest nickel producer. Reserves and production countries, the key material of nickel power battery. Indonesia is still restricting bauxite exports and continues to increase investment in bauxite smelters.
Export of nickel ore, aluminum ore and palm oil in Indonesia
Following Singapore and Vietnam, Malaysia is the focus of economic and trade cooperation between the United States and Japan. The United States intends to strengthen exchanges and cooperation between the two countries in trade and investment, supply chain, digital economy, network security, national defense, and public health. The production base of many industrial products has been transferred to Malaysia, which is an important exporter of electrical and electronic products, accounting for 37% of its total exports in 2020. For example, in April 2021, Microsoft announced that it will invest US$1 billion in building a data center in Malaysia, including the establishment of the country's first regional data center. In December 2021, Intel announced that it will invest more than US$7 billion to build a new chip packaging and testing plant in Malaysia to deal with the impact of the global semiconductor shortage. In April 2022, ON Semiconductor announced that the global distribution center will be transferred from Shanghai to Singapore. The hidden danger of this approach is not in the short term. ON Semiconductor provides more than 80% of the electronic components in the global automotive perception field, and is in the global automotive imaging market. The market share exceeds 60%.
Malaysia Commodity Export Map
Malaysia 1995-2020 Export Value of Electronics Industry (USD)
Overview of Malaysia's import and export situation
Vietnam has also tightened its export of resource-based commodities in recent years, and the export volume of industries with higher added value than the textile industry, such as automobiles and electronics, has also increased rapidly. It can be said that Vietnam has also begun to implement the principle of "holding resources and making money in industry". This policy idea.
Vietnam’s 1995-2020 Export Commodity Value-by Type (USD)
Vietnam 1995-2020 Imported Goods Amount-by Type (US Dollar)
Vietnam's 2020 export commodities and country matrix
Vietnam's imported goods and country matrix in 2020
3 Trends of industrial transfer
From a historical perspective, since the first industrial revolution in the 18th century, the world has experienced four large-scale industrial transfers.
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After the American Civil War, with the industrialization of the United States, Western Europe transferred to the American industry;
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After World War II, with post-war reconstruction, the United States transferred industries to Japan and Germany;
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After 1970, with the rise of the four Asian tigers, Japan transferred industries to South Korea and Taiwan;
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After China's accession to the WTO in the 21st century, the industry has accelerated its transfer to the mainland of China.
Looking at several major industrial transfers in world history, it is not difficult to find that industrial transfer is a process of adapting to changes in regional comparative advantages, or in other words, the result of optimizing the endowment of production factors, which is in line with the law of economic development. (Yunqi Capital Research Report)
Industrial transfer seems to be a necessary and inevitable product of unbalanced economic development. From an equilibrium perspective, industrial transfer brings the possibility of economic development to underdeveloped regions, and theoretically can bring original funds to the economic development of underdeveloped regions. From the perspective of exploitation, industrial transfer seems to be the low-cost exploitation of labor and resources in less developed areas by capital in economically developed areas; In the wave of industrialization in the world, industrial migration accompanied by changes in regional comparative advantages has been quietly going on. In history, there are regions and countries that have seized the wave of industrial transfer and completed their rise, and there are also countries that have lost control of their own resources due to industrial transfer. , reduced to a modern version of a colony. In this special period of this year, industrial transfers are quietly happening again around the world, especially in countries such as China and Southeast Asia. This topic seems to have been given more color. According to Yunqi Capital Research Report, the total order transfers of the four major industries are as follows.
