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Asean's Frontier Economies the Next Stage of Growth for Cambodia, Laos, Myanmar and Vietnam 2 Special Edition Asean’S Frontier Dec

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Asean's Frontier Economies the Next Stage of Growth for Cambodia, Laos, Myanmar and Vietnam 2 Special Edition Asean’S Frontier Dec December 8, 2016 | bloombergbriefs.com Asean's Frontier Economies The next stage of growth for Cambodia, Laos, Myanmar and Vietnam 2 Special Edition Asean’s Frontier Dec. 8, Economies2016 2 Introduction By Tamara Henderson, Bloomberg Intelligence Economist Asean's frontier economies Cambodia, Laos, Myanmar and Vietnam are among the Inside world's fastest growing. These are the region's low income economies, each at a Big Picture different stage of transformation but all following an export-led growth strategy. This Asean's frontier economies are being makes them vulnerable in the short-term to the particularly challenging external transformed through trade with environment. China: page 3 Low labor costs have attracted foreign direct investment, which spurred the increase in export shares for CLMV countries. This is in contrast with a decline in exports as a Factsheets share of GDP for China and most of Asean over the last decade. Exports amount to Cambodia: page 4 nearly 90 percent of Vietnam's economy compared with one-third in 1995 and about two- Laos: page 5 thirds a decade ago. Exports are almost 70 percent of Cambodia's GDP, more than twice the share in 1995, and 35 percent of Laos's economy compared with 22 percent Myanmar for China. Factsheet: page 6 Open economies are more sensitive to external shocks. Asean's frontier economies are even more vulnerable because CLMV exports and imports tend to be concentrated The country's central bank braces for in a small number of products and markets. The bulk of Cambodia's exports are a deeper slide in the currency: page 7 garments, with the former French colony relying on China, Thailand and Vietnam for more than 60 percent of the inputs for garment production, according to the IMF. Q&A: page 8 Laos and Myanmar primarily export commodities. Nearly 65 percent of Laos' exports were shipped to Thailand and China in 2015, while the same two countries accounted Vietnam for 80 percent of imports. China and Thailand also account for the majority of Factsheet: page 10 Myanmar's exports and imports. The exception is Vietnam, which exports a more diverse range of goods, including commodities, garments and electronics. Like Hanoi is pushing ahead with trade Cambodia, most of Vietnam's production is destined for the advanced economies. agreements: page 11 With the external environment appearing increasingly challenging, slower growth in CLMV in 2017 is likely. A further slowdown in China would weigh on the region's Former refugees return to found exports, especially Laos and Myanmar which are heavily reliant on China's commodity startups: page 12 demand for investment goods. Cambodia and Vietnam are better-suited to benefit from China's rebalancing toward consumption as they export a larger share of consumer BI Insights goods that will benefit. All of CLMV will benefit from a larger influx of Chinese tourists. Vietnamese auto sales rise as Laos U.S. President-elect Donald Trump's threat of a trade war with China has scope to and Myanmar increase cement diminish risk appetite and stall private investment. But China's response to the Trump production capacities: page 13 Administration may be to deepen investment links in the region. Further FDI inflows could help these countries diversify their export bases and integrate them into the global Q&A supply chain, following Vietnam's example. Thomas Hugger, chief executive The increasingly challenging external environment may have a silver lining for CLMV if officer, Asia Frontier Capital: page 14 the commitment to reforms is strengthened as a result. The impetus behind Asean's building of an economic community was to reduce the vulnerability of its members to external shocks. There has never been more of an incentive to reduce this sensitivity. Bloomberg Briefs: Asean's CLMV Frontier Bloomberg Brief Managing Editor Bloomberg News Managing Editor Marketing & Partnership Director Paul Smith Linus Chua Courtney Martens [email protected] [email protected] [email protected] +1-212-617-2447 Economics Asia Editors Hanoi Bureau Chief Nathaniel E. Baker John Boudreau Reprints & Permissions [email protected] [email protected] Lori Husted [email protected] Colin Simpson SE Asia Economy Team Lead +1-717-505-9701 x2204 [email protected] Nasreen Seria Interested in learning more about [email protected] Advertising the Bloomberg terminal? Request a Graphic Design Lucy Rosen free demo here. Pekka Aalto BI Asean Economist [email protected] © 2016 Bloomberg LP. [email protected] Tamara Henderson +1-212-617-6759 All rights reserved. This newsletter [email protected] and its contents may not be forwarded or redistributed without the prior consent of Bloomberg. Please contact our reprints group listed left for more information. Big Picture Bloomberg Briefs Special Special Edition Edition Dec. Dec. 8, 8, 2016 2016 23 Big PictureIntroduction By Tamara Henderson, Bloomberg Intelligence Economist Asean's frontier economies Cambodia, Laos, Myanmar and Vietnam are among the Inside world's fastest growing. These are the region's low income economies, each at a Big Picture China Is differentTransforming stage of transformation Asean's but all followingFrontier an export-l Withed growthCash strategy. for RailsThis to PowerAsean's frontier economies are being By David Roman,makes Bloomberg them vulnerable News in the short-term to the particularly challenging external transformed through trade with environment. China’s investment is transforming its Love Thy Neighbour China: page 3 smaller SoutheastLow Asianlabor costs neighbors have attracted like foreign direct investment, which spurred the increase in export shares for CLMV countries. This is in contrast with a decline in exports as a Factsheets never before sharewhile ofhelping GDP for turn China and most of Asean over the last decade. Exports amount to Cambodia, Laos and Myanmar into Cambodia: page 4 nearly 90 percent of Vietnam's economy compared with one-third in 1995 and about two- Laos: page 5 bigger destinationsthirds a for decade its exports. ago. Exports are almost 70 percent of Cambodia's GDP, more than That’s drivingtwice some the shareof the in world’s 1995, and 35 percent of Laos's economy compared with 22 percent Myanmar fastest economicfor China. growth rates and Factsheet: page 6 providing ChineseOpen companies economies withare more low- sensitive to external shocks. Asean's frontier economies cost alternativesare evenas they more seek vulnerable to move because CLMV exports and imports tend to be concentrated The country's central bank braces for capacity out ofin athe small country. number It’s of also products and markets. The bulk of Cambodia's exports are a deeper slide in the currency: page 7 garments, with the former French colony relying on China, Thailand and Vietnam for helping Asia’s largest economy and more than 60 percent of the inputs for garment production, according to the IMF. Q&A: page 8 smaller nationsLaos in its and orbit Myanmar adapt toprimarily what export commodities. Nearly 65 percent of Laos' exports looks more and more like a new era of were shipped to Thailand and China in 2015, while the same two countries accounted Vietnam waning U.S. commitmentfor 80 percent toof theimports. region China and Thailand also account for the majority of Factsheet: page 10 from a more inward-lookingMyanmar's exportsadministration and imports. The exception is Vietnam, which exports a more of President-electdiverse Donald range ofTrump. goods, including commodities, garments and electronics. Like Hanoi is pushing ahead with trade "China’s definitelyCambodia, looking most atof Vietnam'sthese production is destined for the advanced economies. agreements: page 11 countries in generalWith the as external an area environment where it appearing increasingly challenging, slower growth in can sell productsCLMV and in 2017 get good is likely. return A further for slowdownCambodia’s in China would economy weigh is on projected the region's to year, Formeraccording refugees to a Worldreturn toBank found report. exports, especially Laos and Myanmar which are heavily reliant on China's commodity its investments," said Edward Lee, an grow 7 percent this year, while Laos is set Cambodia,startups: Laospage 12and Myanmar are demand for investment goods. Cambodia and Vietnam are better-suited to benefit from for 7.5 percent expansion. Faster growth becoming more incorporated with China’ economist withChina's Standard rebalancing Chartered toward Plc consumption as they export a larger share of consumer in Singapore. "China itself is getting more has also translated into rising income s supplyBI Insights chains, buying intermediate goods that will benefit. All of CLMV will benefit from a larger influx of Chinese tourists. Vietnamese auto sales rise as Laos expensive for its companies, and that’s levels and lower poverty. Based on the goods from its factories and selling U.S. President-elect Donald Trump's threat of a trade war with China has scope to and Myanmar increase cement most recent data from the World Bank, consumer items such as garments and reinforcing thisdiminish trend." risk appetite and stall private investment. But China's response to the Trump production capacities: page 13 China is investingAdministration in everything may be tofrom deepen investmentthe number links inof the people region. living Further on $1.90FDI inflows a shoes that are often made by companies railroads to realcould estate help thesein Cambodia, countries diversify theirday export in Cambodia bases and dropped integrate to them 2.2 intopercent the global ownedQ&A or funded by China. Its imports Laos and Myanmarsupply chain,— the following frontier-market Vietnam's example.of the population in 2012 from 30 percent from Thomasthe three Hugger, Southeast chief Asianexecutive economies of theThe Association increasingly challengingof externalin environment1994. In Laos, may the have poverty a silver rate lining is for16.7 CLMV if economiesofficer, moreAsia Frontier than doubled Capital: inpage the 14 past the commitment to reforms is strengthened as a result.
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