Southeast Asia encompasses 11 countries: Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Cambodia, Brunei, East Timor, and Myanmar. 10 of them being members of ASEAN (The Association of Southeast Asian Nations). This region of Asia is home to an impressive diversity in culture, religion, and economic growth.
With Indonesia being the one country that seemed to have found success in rapid development, compared to the other 10 countries, I am going to tell you the factors that contributed to it, and how developed is this region overall.
A Short History of Southeast Asia
Southeast Asia has been subjected to colonialism from as early as the 8th century. The diversity in cultures has been mostly caused by Western and East Asian influences. Islam is the religion of choice for over 40% of the population, especially the southern part of the region. Communist influences in Vietnam have caused it to be mostly non-religious, compared to the other countries of Southeast Asia.
Before World War I the region was already colonized by the French, Dutch, British, and Americans, who were mostly interested in trade, especially because of the geographical location of Southeast Asia. Since the colonization age, some countries stagnated or developed very slowly, but others, like Singapore, Indonesia, and the Philippines made their way towards urbanization. But how?
During the worldwide economical crises from 1930, hardships gave way to changes in political measures, through which most countries in Southeast Asia achieved independence. Even though most of them relied on agriculture and still consider it to this day an important part of their economy, industrialization and urban development was the start of a rising economy. Today Singapore is one of the main industrial centers of the world, rivaling China.
After the production was nationalized the agricultural economy started increasing steadily especially in Indonesia, Philippines, and Malaysia, which rely on exporting goods like cocoa, palm tree oil, and seafood.
Once they got hold of their natural resources they started processing and exporting them, but in recent years some of their resources are being depleted. Indonesia’s economy has been especially sustained in part by its rich reserves of oil and natural gas, while Brunei exports petroleum.
Attracting foreign investors (FDI)
Because of urban development, Southeast Asia managed to start attracting foreign investors in a variety of industries, investors who have well to gain from the low cost of the region. Singapore seems to be a favorite, Indonesia failing in this department even though it’s the most developed ASEAN country. To sustain the investors, some countries like the Philippines and Indonesia worked on developing the infrastructure and on political reforms. In 2018, Southeast Asia received a record of $149 billion from foreign investors, mostly in Singapore, Thailand, Vietnam, and Indonesia, with Europe being the largest investor, and Japan investing the most in infrastructure.
In recent years, multinational corporations have taken an interest in the Philippines, especially the ones with US headquarters. It helped the economy tremendously, however, it had a social impact when some of them were accused of disregarding labor protection and cutting wages.
Tourism in Southeast Asia
The tropical climate, which is hot all year round, made it possible for it to become one of the most popular tourist destinations of our times. Overall low prices, access to various cultural and historical sites, food, geography, and hospitality, are all contributing factors to its success. Tourism also improved the micro economy of the country, by pulling in revenue for the simple inhabitants of the area, creating new jobs, and creating links for the other sectors of the economy, such as the manufacturing industry and agriculture.
Because tourism depends on lots of other services and facilities, additional sectors of the economy had to develop, in order to sustain the demand and quality. At the same time, it allowed for local traditional businesses to contribute by attracting disposable income from tourists.
Let’s take for example the province of Bali in Indonesia, which received the title of “World’s top destination” in 2017. Even though it used to be completely dependent on its agriculture and fishing, nowadays over 80% of its economy is related to tourism, which boomed in 1970 with the opening of the Ngurah Rai International Airport. According to a study from Hotel Investment Strategies, in 2019 Bali saw a rise of 3.6% in the number of international tourists, mostly due to the fact that authorities and locals preserved the natural beauty of these places. A plan for building several artificial islands got shut down after causing internal revolts among local people who marched against it and won.
Aside from giving tourists the chance to enjoy the wild beauty and practice scuba diving and other sports, Bali integrated its traditions in the experience, by opening the doors of ancient temples and villages for tourists to experience the day-to-day life of local people.
Real estate in Southeast Asia
Because the urban population has been constantly increasing all of Southeast Asia, the real estate sector has been rising steadily, supported by the population’s need for accommodations. Commercial properties are also in strong connection with the development in other sectors. Office buildings are on the rise as more and more multinationals are opening their doors. Not only that, but standards are rising as well, as more cities are aiming to become “smart cities” and maximize their efficiency. Bangkok, Singapore, and Manila are already on the way to becoming high-end cities.
Because the population is willing to advance in many of the ASEAN countries, the living conditions of citizens are greatly improved, especially through new, energy-efficient buildings.
Southeast Asia’s economic future
It’s hard to make an overall prediction for Southeast Asia because there are major differences between the higher developed countries and the ones that are moving slower. Myanmar, for example, has been stagnant for decades and the economy is extremely poor. Cambodia was in the same situation until recently when it was promoted from low class to middle class, mostly helped by its agriculture. Singapore, Malaysia, Indonesia, and Brunei are favorites when it comes to future economic diversity.
One thing is for sure. Southeast Asia has plenty of opportunities for economic growth for the next decade and most of its countries are heading in the right direction.
I hope you found this informative. Read more articles about Asia and let me know your thoughts below!