The ASEAN states: the underestimated growth markets

When people talk about the enormous economic growth in Asia, many think only about China and India. The share of the ASEAN states (Association of Southeast Asian Nations) in world trade is often underestimated. In fact the ASEAN with member countries Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam have been in the fast lane for years, despite the world economic crisis. The figures speak for themselves: China's share in world trade is 10% while the ASEAN states share is 6% followed by India with 2%.

With some 600 million people the ASEAN free trade zone, which was established in 1967 originally by Indonesia, Malaysia, the Philippines, Singapore and Thailand to improve their economic chances, is today a huge market, bigger than the European Union with around 500 million people. States Andreas Lapp, chairman of the board of Lapp Holding AG: "The commercial dynamic of the ASEAN states offers us enormous opportunities."
The ASEAN states with a €175 billion movement in products and services is the EU's seventh biggest trading partner. On the other hand the member states of the EU with 10.9% are the second largest trading partners of the ASEAN states after China. In addition the largest investors in the ASEAN states come from the EU.
Particular growth fields are the chemical industry, mechanical and systems engineering, infrastructure projects and renewable energies. However there are also risks. These include the uneven commercial performance situation, the political systems and the religious diversity but also corruption, bureaucracy and lack of skills.

Development of the key ASEAN countries
With its outstanding infrastructure and favourable geographic location, the city state Singapore is of special significance. It is highly industrialised, it has a free market economy, it is open to the world and free of corruption. It serves as a gateway to the other ASEAN member states. The World Bank has declared Singapore the most business friendly state six times in a row. Economic growth in 2011 was 4.8% (the previous year 15%).
Malaysia is also politically stable and has a well-established and extensive infrastructure. The country is also rich in raw materials (mineral oil, natural gas, rubber, palm oil). Favourable cost structures and legal security encourage foreign investment. Economic growth is around 5%.

With a population of 240 million Indonesia has the fourth largest population in the world. The domestic market is booming. Large growth rates are expected particularly in the consumer sector and in infrastructural projects. Growth has been 6.5%.

Despite the after-effects of the recent flood catastrophe in Thailand economic growth of 3.6% is predicted for 2012. Private consumption and reconstruction projects support the growth. The inflation rate most recently has been over 4%.

The growth markets in the Philippines are the building sector, the food and beverages industry and the overall infrastructure sector. Nevertheless, there are extensive limitations for foreign investors. Corruption also casts a shadow over the business climate. Growth of 7 to 8% was forecast for 2011.

Even communist Vietnam is becoming ever more attractive for investors. Important factors are low wage costs and around 85 million inhabitants - a large sales market. Lack of infrastructure and energy supply hold back growth however. Growth was 6% in 2011 with 18% inflation.

The Lapp Group in the ASEAN market
Via the joint venture corporation JJ-Lapp Cable, the Lapp group is active with its own branches in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. With the opening of its own factory in Indonesia (PT JJ-Lapp Cable SMI) in the second half of the last financial year, Lapp is now producing for the first time in Southeast Asia and is now closer to its customers. Andreas Lapp stated: "For me, Indonesia is also one of the BRIC countries. Growth is enormous. This is why we decided to produce there ourselves."

The number of Lapp employees in the ASEAN region rose this year from 93 to 223. By the end of 2012, the figure should rise to around 250. Sales increased from 25 to €32 million in the last financial year. In 2011/2012 the target is sales of €44 million. Along with the increase in the number of employees, warehousing and logistics capacities will also have to be improved. The aim is to significantly increase sales activities in the ASEAN region. Core markets for the Lapp Group are primarily infrastructure, with rail, airports and power stations, renewable energies, automation and the food and beverages sector. Andreas Lapp stated: "ASEAN is a huge growth market. We need to be there."