Recently, for the first time in a decade, Southeast Asia has attracted more Foreign Direct Investment or FDI than China as investors shift faster toward building “China + 1” supply chains amid manufacturing costs and rising tariffs. Based on the report of Southeast Asia Outlook, 2024-2034 shared a robust economic trajectory for the region with demographic advantages and a shift in global supply chains.
Six Southeast Asian economies—Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam—will have an average GDP growth of 5.1% until 2034. This growth rate is expected to outstrip China’s projected growth from 3.5% to 4.5% over the period. Vietnam is anticipated to have the highest growth rate of 6.6%, followed by the Philippines at 6.1%.
“Multinational investments will be highly contested, with the competition between countries improving outcomes for both businesses and consumers.”
- Charles Ormiston, Advisory partner at Bain and chair of Angsana Council
The report also anticipates continuous strong growth in FDI in Southeast Asia. Some of the emerging growth sectors in Southeast Asia include electric vehicle and supply chains across Thailand and Indonesia. Also, semiconductor production in Malaysia, Singapore, and Vietnam with a surge in data centre investments with high-quality FDIs and traditional incentives. Southeast Asia has historically relied on renewable resources to address the gap and enhance the region’s attractiveness for FDIs.
