Thursday, October 1, 2020

Industry Enablers in Southeast Asia 2020

Industry Enablers in Southeast Asia 2020

About this report

As Southeast Asia just experienced a tech investment and startup boom over the last half a decade, Momentum Works Industry Enablers in Southeast Asia – a broad overview of the business environment in the region seeks to give a fair representation and analysis of the region’s economic development as well as its infrastructure readiness. 

This report is a concerted effort to assess, deconstruct, and more crucially, connect, relevant factors that matter to further economic development. With over 100 indicators analyzed, and 3 major areas covered (infrastructure, connectivity, human capital) we distilled, simplified, and connect all these factors into 9 key indicators to help investors and companies understand the underlying factors that drive industries and businesses in the region.

industry enabler index

Outline of this report

  1. Topographical and natural factors hinder connectivity and infrastructure development in the region
    • Population concentrated in and around metropolitan areas
    • Geographical fragmentation creates natural barriers to effective connectivity
    • Geographical fragmentation raises challenges for modernization
    • Concentration in natural resources represents a double-edged sword for further modernization
  2. Regulations still have room to grow to foster further investment, trade and human capital growth
    • Regulations have improved, but there is still a gap to fill up in terms of human capital, trade and investment
    • Average trade tariffs rates have been declining through time, except for Indonesia and Philippines 
    • High levels of corruption disrupt domestic and foreign investment
  3. Sudden modernization in Southeast Asia skipped some of the necessary stages to consolidate infrastructure and human capital properly
    • The shift to industrial societies caused massive changes in the region
    • Industrial development is directly associated with a higher household disposable income and higher education
    • Possession of durable goods and digital devices directly related to income, trade and regulations
    • Possession of durable goods and digital devices in 2019 (percentages) per household
    • Modernization and female inclusion in the labour force modelling population structure
  4. Logistics present connectivity challenges rather than infrastructure quality related problems
    • Uneven infrastructure quality, although merchandise trade and disposable income raise
    • Infrastructure challenges in Southeast Asia, mixed results for different countries
    • Infrastructure quality closely improves with higher levels of international trade and connectivity
    • High air and sea connectivity, but road connectivity still lacking, outside Singapore and Thailand
    • The strength of the domestic economy is connected to the road infrastructure, Southeast Asia lags behind many other nations
  5. High smartphone and internet penetration in the region doesn’t mean countries are ready for the next era of digital consumption
    • Telecommunications infrastructure increases although Philippines and Indonesia are in the tail
    • Mediocre levels of infrastructure affects general quality of services such as internet speed
    • Highly regulated environments affects competitiveness resulting in higher prices and less options for consumers
    • Digital devices penetration increases fast, especially smartphones
    • Lack of infrastructure and human capital hinders the progression to the digital era
  6. Financial development delayed by mediocre state of human capital
    • More infrastructure is not enough to integrate the population into banking
    • Human capital in the form of salaries, expenditure and education is critical to increase financial participation. 
    • The infrastructure itself is not enough to increase the percentage of banked population
    • Deregulations allow the banking infrastructure to develop further in terms of quantity and quality
    • Banking infrastructure increases with economic development until reaching a point in which the trend decreases, while other factors such as the telecommunication infrastructure rises
  7. Country snapshots
    • Executive country summary
    • Watch out for (challenges or opportunities, depending on your perspective)

demographic

southeast asia infrastructure

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