South-East Asia could hit RM21t growth mark

SINGAPORE • South-East Asia’s been home to almost half of the biggest growth drivers in the past half-century. To keep investors interested, it’ll have to make the right moves across technology, education and infrastructure, according to Diaan-Yi Lin, a senior partner at McKinsey & Co.

Among 71 developing economies of the past half-century, 18 are responsible for the lion’s share of growth, with eight of those within South-East Asia, a September McKinsey report showed. With the right policy mix, these economies could double their GDP to almost US$5 trillion (RM20.7 trillion) over the next decade, or about 5% of the global economy, the analysts found.

Lin sees two categories of South-East Asian economies: The so-called “CLMV” countries — Cambodia, Laos, Myanmar, Vietnam — that grew over 5% in a two-decade span through 2016, and the others — Malaysia, Thailand, Singapore and Indonesia — that kept up about a 3.5% pace in the 50-year span from 1965.

Lin sees two factors that have bolstered the region since 1965. The first, and more important, is capital accumulation— domestic savings and foreign direct investment.

Secondly, the role of large companies — those with more than US$500 million in revenue. About two-thirds of the companies at the top of the food chain were rotating out of that echelon, meaning there was healthy turnover rather than monopolies that restricted dynamic growth, Lin said. — Bloomberg