Johannesburg – Member countries of the Association of South East Asian Nations (Asean) have identified Africa as the “last frontier” when it comes to trade and investment opportunities.
This is according to Edward Liu, group managing director of conference and exhibition management services (Cems), who was speaking to journalists on Wednesday. He shared on the economic opportunities between the two regions.
The Asean region includes 10 South East Asian countries. These are Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam. The region has a total population of over 622m people with a growing middle class and rising consumer power.
“This is an important aspect giving tremendous economic and business opportunities for countries doing business with Asean,” said Steven Tan, general manager at Cems.
The size of the Asean market is effectively $2.6tr. In 2014, the Asean Economic Community (AEC) was the third largest economy in Asia, the seventh largest in the world and is expected to be the fourth largest by 2050, said Tan.
Member countries have been looking at alternative markets instead of traditional markets such as the US. Africa has been identified as one of these new markets. “It is about time we take the initiative to bring the two regions together,” he said.
The striking feature of Africa is that its population close to 1.2bn. “Africa is the fastest growing market worldwide, with an annual GDP growth rate of 5%,” he said. By 2030 the spending power of consumers is expected to reach $1.3tr according to McKinsey & Company.
“We believe we can do more to strengthen business ties between regions in Africa and Asean countries,” said Liu.
Asean-Africa trade has been growing at a “phenomenal rate” of 15% since 1989, said Tan. The value of trade grew from $2.8bn in 1990 to $42.5bn in 2012. The future opportunity lies in the compounded annual growth which will amount to $384bn worth of trade between 2015 and 2019, he explained.
Africa imports mainly palm oil, rice, various commodities motor vehicle accessories, and oil and gas. In turn, it exports cocoa beans, oil and gas, scrap metals, gold, coco nuts and nuts.
The biggest trading partners include Thailand, with trade worth $11.6bn, Indonesia with trade worth $10.7bn and Singapore with trade worth $9.5bn. In turn South Africa, Nigeria and Egypt are the biggest importers.
More than 300 Asean companies operate in Africa. They are mostly involved in agribusiness, manufacturing, oil and urban development.
Asean will celebrate the 50th anniversary of its formation next year. A business expo will be held in South Africa next year where business people from both regions will come together for the networking event, with the hopes to boost bilateral trade and investment.