Investment in South East Asia

Just written an article for the ICAEW on the opportunities for PE firms looking to invest in SE Asia.

Here are my key findings:

-Today, South East Asia is a key target market for international private equity investors. According to research conducted by the Singapore Venture Capital Association, just over US$6bn was raised for deployment in South East Asia in 2012.

-Indonesia is the world’s fourth-largest economy, is rich in mineral resources, and from a private equity perspective, has a growing and affluent middle class, makes it an ideal destination for investment.

 

-Malaysia, another growing economy - and former British colony - is home to a thriving consumer electronics industry. Although, politically, its Islamic background restricts its involvement with Western firms.

-Vietnam has a growing agriculture and agricultural machinery industry, its status as a Communist nation, to some extent, inhibits trade with the US.

-China: In spite of the slow-down in the economy, China is still on course for a projected 8% in economic growth in 2013, compared with less than 1% in the UK. This, coupled with the growth of state-owned enterprises, makes China very attractive region for international private equity firms.

-For investors looking to succeed in South East Asia, there are several considerations to take into account. The region is diverse both regulatory and culturally, and yet there are gains to be made.  Funds raised in the region are expected to grow at an annual rate of 30% cent over the next three years, making it potentially one of the most lucrative markets globally.

Conclusion:
Unlike Europe or the US, South East Asia cannot be categorised as one single market place. Businesses looking to operate in the region need to ensure that they work with the right people, and that means spending time researching the market. Investing the time in research means minimising the risk.