2024 What are the emerging markets in Asia?
BUSINESS TIPSASIA BUSINESS FACTSSOUTH KOREAVIETNAMJAPANSINGAPOREINDIATAIWAN
Alan Wong
3/12/202412 min read
Emerging Market Vibrancy in Asia
As the calendar turns to 2024, the vast and vibrant continent of Asia stands at a critical juncture of transition and transformation.
With a tapestry as diverse as its myriad cultures, the economic landscape of this dynamic region presents a spectrum of markets each charting unique trajectories.
Among these, the rising stars are the emerging markets, locations of burgeoning economic activity and investment opportunities that are increasingly capturing the attention of global investors.
India and Indonesia are at the forefront, demonstrating robust domestic demand and strong growth in capital expenditure.
Their vigor propels the MSCI Asia Emerging Market Index, setting a brisk tempo for others in the region.
This nuanced portrait of Asia is not just of economies expanding in the shadow of global giants but of markets with their own gravitational pull, offering new frontiers for economic exploration and investment ingenuity in 2024.
Technological Adoption and Digitalization in Asia's Emerging Markets
In 2024, Asia's economic metamorphosis is significantly powered by its embracement of digitalization and technological innovation.
Across the continent, a digital revolution unfolds, accelerated by the proliferation of advanced technologies like artificial intelligence (AI), cloud computing, and the industrial internet of things (IoT).
These technologies are reshaping not just industries, but the very fabric of business operations, driving change at an unprecedented pace.
In this era of transformation, Asia witnesses the connectivity of billions of devices, opening up a new realm of possibilities in manufacturing, healthcare, and urban development.
A notable example is the integration of digital twins in manufacturing, a testament to the industrial agility that digitalization brings.
The rapid growth in Asia's digital economy is also characterized by the rising adoption of generative AI, where chatbots provide conversational assistance, transcending traditional search-based models and reshaping our relationship with data and knowledge.
This shift towards intuitive, AI-driven interfaces suggests a future where business intelligence is not only about the data collected but how seamlessly it can be accessed and utilized by every stakeholder.
As these technological trends converge, they spawn a continuous learning culture within organizations, essential for sustaining innovation at the edge of technological frontiers.
The businesses that thrive are those that embrace a 'LearnOps' approach, integrating learning directly into their operations, and fostering a workforce equipped to navigate and leverage the nuances of an increasingly complex tech landscape.
Asia Emerging Market: Malaysia
Malaysia is one of South East Asia's most advanced economies and is home to a prosperous export-oriented manufacturing hub.
Also, it is poised for economic resilience and growth, marked by a pro-investment government stance that encourages liberalization and offers incentives. With a high trade-to-GDP ratio, Malaysia's open economy and business-friendly policies facilitate ease of doing business.
Malaysia's standard corporate tax rate is 24%, and for SMEs with a gross income of no more than MYR 50 Million, the first MYR 600,000 has a tax rate of 17%.
Strategic initiatives for diversification focus on service and manufacturing sectors, enhancing its industrial base and fostering emerging industries with investment potential.
Besides, its highly educated workforce and increasing internet penetration make it a promising market for tech and SaaS companies.
These initiatives, alongside strong external demand and domestic spending, are expected to contribute to Malaysia's positive economic outlook for 2024, despite external challenges like currency fluctuations.
Asia presents myriad opportunities for entrepreneurs, start-ups, and established foreign companies.
While Asia is widely regarded as a booming technological hub, the possibilities are not limited to the region's existing and well-developed financial and tech centers.
Foreign investors have access to a rapidly growing market, with the chance to grow their business across a host of industries.
However, it's important to note that each of these markets has its own set of challenges, cultures, and unique business environments.
Therefore, businesses must perform their due diligence before stepping into the Asian market for expansion. In our opinion, it is a must to find a local consulting company or a partner with a trusted track record to navigate through these local challenges.
With over 50 years of experience combined with our team at ToAsia.biz, we are ready to provide business consultation services to lead your business into the Asia Pacific region - profitably.
Talk to us now and see how our playbook is different from business consultants out there where our focus is to help you expand at the right pace, staying lean and profitable.
Asia Emerging Market: India
India, as an emerging market, is showcasing economic resilience and robust growth despite global challenges.
The country’s GDP growth projections for 2024 have been positive, reflecting strong performance across key sectors like manufacturing, construction, and services.
With the government’s focus on structural reforms and digital initiatives, such as the Goods and Services Tax (GST) and digitization efforts under the Aadhaar and Jan Dhan programs, there is a notable surge in entrepreneurship and startups that are leveraging the India Stack and opportunities related to the "Make in India" initiative.
The confidence among Indian CEOs in the country’s economic growth and their own companies' prospects is high.
A vast majority believe that the Indian economy will continue to improve, with many expressing confidence in their companies' potential for revenue growth over the next few years.
This confidence is rooted in changing customer preferences, adoption of new technologies, and development of novel products and services, along with strategic partnerships.
There's a significant push for technological advancements, particularly generative AI (GenAI), which is expected to deliver substantial benefits and bolster trust with stakeholders.
This aligns with the CEOs' top actions for reinvention which include adopting new technologies, developing new products and services, and forming strategic partnerships.
India's growth story is also marked by a strong emphasis on infrastructure development and capital investment.
Public-led infrastructure investment and global supply chain diversification are creating multiple opportunities.
There's also a focus on the green transition, with electric vehicle manufacturing and solar panel production being highlighted as sectors with growth potential.
In conclusion, despite the revisions in growth forecasts due to global economic conditions, India’s growth estimates remain higher than almost all major economies.
This growth is a testament to India's economic resilience, driven by domestic stimulus replacing external stimuli, and is supported by a rising trend in announced projects and capital expenditure by the private sector.
The country’s economic outlook remains robust, with projections of India being one of the fastest-growing significant economies, potentially becoming the third-largest by 2030.
The positive sentiment is further bolstered by India's solid domestic demand, a pickup in capital investment, and early signs of a new private sector capital formation cycle.
Asia Emerging Market: Indonesia
Indonesia's economic growth is expected to stabilize, with GDP growth projected to ease slightly to an average of 4.9% over 2024-2026, down from 5% in the current year.
The easing comes as commodity prices soften, but the country's economic foundations remain resilient. Business investment and public spending are poised to contribute to growth, thanks to reforms and new government initiatives.
The economic outlook, while positive, acknowledges potential external risks such as global interest rate changes and geopolitical uncertainties.
The Indonesian government's strategy includes advancing green initiatives, enhancing trade policy, and continuing reforms to boost efficiency, competitiveness, and productivity growth, setting the stage for sustained economic development and the aim of becoming a high-income country by 2045.
Indonesia is increasingly seen as a key player in the "China Plus One" strategy, a diversification plan by businesses looking to mitigate risks associated with overreliance on China by adding alternative locations for manufacturing and supply chains.
As such, Indonesia is capitalizing on its strategic location, abundant resources, and growing economy to attract foreign investment. The country's focus on sectors like digital technology, e-commerce, renewable energy, and manufacturing is creating new opportunities, positioning it as an attractive market for diversification and investment in Asia.
Indonesia is constructing a new capital city, Nusantara, in East Kalimantan on the island of Borneo.
This ambitious project aims to alleviate the burden on Jakarta, the current capital, by transferring the administrative and political heart of the country to a location chosen for its minimal risk of natural disasters.
Nusantara is envisioned as a "sustainable forest city," designed to blend modern urban living with environmental conservation, including smart city technologies and green infrastructure to create a carbon-neutral community.
Asia Emerging Market: Vietnam
Vietnam's economic landscape for 2024 is set against a backdrop of optimism, with GDP growth expected to accelerate from 4.7% in 2023 to 5.5% in 2024, and further to 6.0% in 2025.
The nation's economic resilience, bolstered by public investment and policies geared towards a green transition, presents a compelling case for investment opportunities across its diverse and expanding industrial base.
Vietnam is positioning itself as an attractive hub for manufacturing and exports, leveraging its robust economic fundamentals.
The nation's strategic push in sectors such as semiconductor manufacturing, IT services, healthcare, pharmaceuticals, and consumer goods is drawing significant foreign investment.
With a projected economic growth acceleration and government strategies aimed at enhancing public investment and infrastructure, Vietnam is not only enhancing its global economic integration but also cementing its status as a key destination for the "China Plus One" strategy.
The commitment to net-zero emissions and the development of capital markets further underscores its long-term investment appeal.
Asia Emerging Market: Philippines
The Philippines is recognized for its vibrant labor market and substantial consumer demand, essential pillars of its economic stability.
With a notable population exceeding 90 million, the country values the high reputation and reliability of its workforce.
The government's strategies for sustainable growth, emphasizing these sectors, aim to leverage the Philippines' socioeconomic strengths, offering a conducive environment for business and fostering emerging business opportunities.
The Philippines is leveraging its strong digital literacy and natural resources to fuel economic growth across various sectors.
E-commerce, eco-tourism, innovative agriculture technologies, digital financial services, health and wellness, renewable energy, and online education are experiencing significant growth.
These developments reflect a broader trend towards digital transformation, sustainability, and the integration of modern technology in traditional sectors, presenting ample opportunities for investment and entrepreneurship in the country's dynamic market landscape.
Asia Emerging Market: Singapore
Singapore's economic landscape is a testament to its resilience and efficiency, fostering an environment where businesses, especially those related to fintech and innovation-driven sectors, thrive.
Singapore's economy showed resilience in 2023, growing 2.8% in the final quarter, marking the fastest growth since Q3 2022.
This growth, driven by an expansion in the manufacturing sector and across other clusters, highlights Singapore's adaptability in a challenging global environment.
With inflation gradually declining and the government forecasting growth of 1% to 3% for 2024.
With a GDP per capita surpassing US$ 50,000 and world-class intellectual property protection, Singapore positions itself as a global knowledge capital.
The city-state has one of the world's lowest corporate tax rates and many business-friendly policies. Singapore's tax regime features a corporate tax rate on taxable income at 17%, and all foreign-sourced income is tax exempt, provided that income has been subjected to tax in a country with a headline tax rate of at least 15%.
The country's commitment to research and development, alongside its strategic economic initiatives, is paving the way for growth in the automotive, lifestyle, nanotechnology, and safety and security industries.
These elements, combined with the ease of Singapore business registration, make it an enticing destination for investors and entrepreneurs looking to tap into Asia's vibrant markets.
Asia Emerging Market: Thailand
Thailand, with its strategic location, acts as a pivotal gateway to Asia, providing a seamless conduit for trade with major economies like China, India, and ASEAN countries.
Thailand ranks 21st out of 190 countries in the World Bank’s 2020 Ease of Doing Business report, making it an attractive location for business expansion through government efforts like the Board of Investment (BOI), which simplifies regulations and offers incentives.
The country is witnessing growth across several key sectors, including automotive, agriculture, tourism, and technology, buoyed by government initiatives and investments.
With a focus on sustainable practices and digital transformation, Thailand is crafting a future that embraces innovation while capitalizing on its traditional strengths. This evolving landscape presents a myriad of opportunities for investors and businesses looking to engage with Thailand's dynamic market.
Asia Emerging Market: South Korea
South Korea's progression to an industrialized economy showcases its strength in economic and digital sectors.
With a high-income OECD status, it focuses on sustainable growth in technology-driven fields like semiconductors, expecting a 5.2% export growth across key industries in 2024, reaching USD 504.7 billion.
The nation is adapting to global demands and challenges, fostering innovation and offering supportive measures to tech companies and Korean startups. This strategic approach makes South Korea a thriving hub for digital economy and high-tech talent.
Asia Emerging Market: Taiwan
Taiwan's strategic focus on semiconductor innovation and technology, alongside its advantageous trade relationships, positions it as a vital player in the global market.
The government's supportive policies and incentives for tech companies, combined with Taiwan's highly skilled workforce, make it an attractive destination for business expansion.
With robust economic growth forecasts and a commitment to maintaining its leadership in advanced manufacturing and digital technologies, Taiwan offers a dynamic and promising environment for investors and businesses looking to capitalize on high-tech and R&D opportunities.
Asia Emerging Market: Japan
Japan, the world's third-largest economy, is navigating a crucial phase as it transitions from ultra-loose monetary policies to more normalized economic conditions.
This shift is marked by the expected phasing out of the negative interest rate policy and a modest interest rate hike, reflective of the country's commitment to tackling persistent inflation driven by service sector demands and wage growth amidst labor shortages.
As Japan addresses these macroeconomic challenges, it's also focusing on revitalizing its economy through strategic labor market adjustments, sustained positive inflation expectations, and a resurgence in private sector investment.
This delicate balance of economic strategies aims to maintain reflation without stoking runaway inflation, indicating a cautiously optimistic outlook for business reforms and market transitions.
With technological advancements and high consumer spending, Japan remains a stable, innovation-driven environment for both industry leaders and new market entrants, offering a gateway to broader North Asian markets.
Sustainable Trends Reshaping Asia's Economy
Asian markets are increasingly embracing the green economy, with a surge in sustainable projects aimed at mitigating climate change and promoting environmental responsibility.
Significant investments are channeled into renewable energy ventures, green building initiatives, and eco-friendly infrastructure developments.
These projects not only contribute to reducing carbon footprints but also generate economic opportunities and job creation, reflecting a transformative impact on regional markets and signaling a strong commitment to sustainable growth.
Adapting New Demographics to Evolutions in Emerging Asia
Asia’s market dynamics are undergoing profound shifts due to changing demographics.
Rapidly aging populations in countries like Japan and South Korea pose unique challenges for healthcare, pensions, and workforce management, while younger demographics in regions such as Southeast Asia drive market growth, innovation, and a focus on digital engagement.
These demographic transitions have significant geopolitical implications as well, influencing labor mobility, economic policies, and regional market integration. Balancing the needs and potentials of diverse age groups is key to sustainable market success.
Infrastructure Initiatives Fueling Asia's Emerging Markets
Asia is seeing an unprecedented wave of infrastructure development, with mega-projects like high-speed rail networks like Indonesia's Whoosh, ports, and smart cities dotting the landscape.
These projects are pivotal to regional market growth, enhancing connectivity, stimulating economic development, and attracting foreign investment.
With each new road, bridge, or tunnel, Asia is not only improving the daily lives of its citizens but also laying the groundwork for a more integrated and prosperous economic future.
Assessing Asia's Emerging Markets Complexities
Asian markets are confronting a confluence of political, economic, and social risks.
Political tensions, uneven economic recovery post-pandemic, and social disparities present considerable challenges.
However, adaptive policies and reforms are being implemented to mitigate these barriers.
Markets are fostering resilience through diversification, embracing technology, and investing in human capital to navigate the complexities of today’s global landscape.
Alan Wong is founder of ToAsia.biz and a startup mentor with over 20 years of professional experience managing software, Saas and consulting services MNCs.