27 March 2018, Singapore – Maybank Kim Eng, ASEAN’s leading investment bank, said at its Invest ASEAN conference today that it believes the rise of China and new technology will be the two key forces driving the biggest change in ASEAN in the next decade.
Between 2006 and 2016, China’s outward investment into ASEAN has risen at a CAGR of 45%, from US$1.8 billion to US$71.6 billion, making it the 3rd largest FDI contributor to ASEAN. Trade between ASEAN and China has also increased by 16% from 2016 to 2017. ASEAN also accounts for the largest share of Chinese M&A investment, making up about 30% of total M&A investment to Belt & Road countries for the period of 2005-2016.
Last year, China strengthened its commitment to the Belt & Road Initiative (BRI) by pledging an additional US$124 billion. Given China’s high savings rate and its push to strengthen regional connectivity via the BRI, the capital flows to ASEAN will continue increasing and accelerating in the next few years.
New and disruptive technology is also driving change and enables the ASEAN marketplace, impacting almost every industry and propelling the growth of tech startups. The funding to ASEAN tech startups have been increasing and surged in the last two years - in the first eight months of 2017, disclosed equity funding was around US$6.5 billion, double the US$3.1 billion in 2016, despite lower number of deals.
Dato’ John Chong, CEO of Maybank Kim Eng Group said that he believes the tech environment in ASEAN is still at an early phase of growth despite the disruption the marketplace is experiencing. “The majority of ASEAN’s tech deals in recent past are still at the seed-stage and while e-commerce is growing rapidly in ASEAN, the penetration rate remains relatively low at between 2%-5% as compared to more established markets like China (19%), Korea (20%) and the United States (10%). E-commerce transactions will likely grow exponentially in ASEAN, driven by innovations in e-payments and tech platforms.
The tech sector is also increasingly attracting more China M&A investments in recent years, reflecting the rapid offshore expansion of China’s emerging tech titans. Based on Maybank Kim Eng’s research, the IT communications sector attracted the largest share of China’s M&A investment to BRI countries in 2016.Among the notable tech M&As in ASEAN include Alibaba’s purchase of Singapore-based e-commerce player Lazada, JD.com Inc.’s investment in Indonesian online marketplace Tokopedia and Tencent’s investment in Indonesia’s ride-hailing service Go-Jek.
Dato’ John said “For Maybank Kim Eng, the dual rise of China and tech presents new opportunities for us. For instance, we are looking into how we are able to provide access and open up channels for our clients to participate in this growth. We are also keen to capture the financing opportunities, particularly for the infrastructure projects.”
This year’s Invest ASEAN Singapore conference brought together thought leaders to provide insights into the geopolitical, business and technological trends that could shape the ASEAN landscape.
Held at the The Ritz-Carlton Millenia Singapore, the event attracted over 900 delegates. A total of 57 corporates from Thailand, Malaysia, the Philippines, Indonesia, Singapore, Vietnam, India and Hong Kong and 132 funds across the globe totalling US$16.3 trillion in Assets Under Management participated in the conference.
 China’s Internet Giants Go Global, CB Insights