The competitiveness of export industries in Emerging Asia, such as electronics, the automotive industry, machinery, textiles, agriculture and consumer goods, is projected to drive export growth by a large fraction. Governments are implementing policies and initiatives to strengthen and diversify the export base and develop infrastructure such as transportation networks, ports and logistics. These, plus a stable political environment, should lead to an increase in FDI inflows. Looking ahead and barring the impact of a prolonged slowdown in external demand, countries in the ASEAN will continue to reap export benefits thanks to large inflows of FDI in 2021 into manufacturing, finance and some service industries. These countries are broadening their export base to include electric vehicles (EV), pharmaceutical goods, electronics, ICT and fintech services. Malaysia is strengthening its competitiveness as a global electronics hub through investments from multinational companies such as Intel’s USD 7 billion investment in a semiconductor packaging plant and another investment valued at MYR 8 billion, or about USD 1.7 billion, on a wafer fabrication module facility which will add significant manufacturing capacity in power semiconductors. Indonesia also benefits from an upsurge in FDI inflows as it implements the job creation law and the government’s industrial downstreaming strategy for processing raw minerals. The latter strategy aims at helping create Indonesia’s production capacity along the electric vehicle supply chain and help establish itself as an EV battery production hub. Major EV makers in the United States and China are finalising investment deals in Indonesia to boost its nickel-based EV battery industry. In the Philippines, amendments to foreign ownership regulations and reform measures that reduce corporate income tax by at least five percentage points are expected to attract more FDI. The RCEP is also expected to boost garment exports from the country by broadening its export market.
Meanwhile, Cambodia’s Export Diversification and Expansion Programme is gearing towards diversification to higher value-added segments in manufacturing, such as semiconductor production. It is also strengthening export capacity in the garment, tourism and agriculture sectors. In India, a substantial capital outlay in the 2023/24 budget will be channelled towards improving infrastructure, strengthening connectivity and enhancing the overall export value chain. Along with advantageous demography and a steady growth trajectory, this is expected to lead to greater flows of FDI into the manufacturing sector.