ASEAN Market Watch: Thai Startups, Indonesian FDI, and BMW’s Malaysian Expansion

May 4, 2016 Posted by ASEAN Briefing Reading Time: 4 minutes

Thailand: Government Announces U.S. $570 Million Fund for Startups

Uttama Santayana, Minister of Information and Communication Technology (ICT), announced the launch of a fund for Thai startups on April 25. The fund of U.S. $570 million will attempt to incentivize Thai startups to move away from traditional development strategies. Savanayana says that the fund will finance around 2,500 firms. The objective of the financing is to accelerate innovation and help Thai startups expand into other ASEAN countries. The government intends to increase the number of startups to 10,000 by 2018.

Pichet Durongkaveroj, Minister of Science and Technology, also stated that the government plans to initiate new zones across the country to promote diversification of economic activity. In addition, Software Par Thailand, which is under the aegis of the National Science and Technology Development Agency, announced that it will provide financing of U.S. $22,300 to 50 local tech startups. The plan will create a conducive environment for startups, which are generally cash-strapped. This growth will also incentivize foreign funding for such startups, which is expected to boost economic growth in Thailand. The government plans come in the wake of slow economic development in the country since May 2014.

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Indonesia: Increased FDI in Q1 of 2016

The Investment Coordination Board (BKPM) said that FDI into Indonesia in Q1 (January-March) 2016 rose 17.1 percent in terms of Indonesian Rupiah when compared to the FDI in Q1 2015. Indonesia received around U.S. $7.27 billion in FDI in Q1 2016, which comprises around 25 percent of the overall FDI target for 2016. Of industries receiving capital inflows, pulp, paper, and base chemical industries received the highest proportion of the FDI.

The figures bode well for Indonesia and show signs of economic improvement in 2016 after a sluggish 2015. The figures might be slightly skewed as the measurement is in Indonesian Rupiah, which is quite volatile. However, the trend of economic growth seems credible. The rising FDI reflects rising investor confidence.

In addition, President Joko Widodo announced plans to expand manufacturing and tourism in the country. To this end, Widodo announced in February that several sectors would be opened to FDI; however, specific regulations have not yet been announced. The rising FDI and the president’s statement highlight the opportunities for foreign investors in Indonesia in the coming months.

RELATED: The Philippines Export Development Plan: Addressing Obstacles to Trade

Malaysia: BMW Makes Malaysia its Export Hub

BMW has chosen Malaysia as its export hub. The German luxury carmaker will use Malaysia as an export hub for its flagship 3, 5, and 7 Series models. Malaysia will export BMW cars to Vietnam and the Philippines.

BMW intends to increase its annual production capacity to 11,000 cars by 2018. Han Sang Yun, BMW Malaysia Sdn Bhd Managing Director and Chief Executive Officer, recently stated BMW’s intent to use Malaysia as a strategic hub to gain access to emerging markets in ASEAN. The announcement was made during the launch of the Malaysian-assembled BMW X1 and BMW X4 vehicles.

Datuk Seri Ong Ka Chuan, International Trade and Industry Minister, said that the plan to make Malaysia a regional exporting hub is a strategy that would enable companies to make higher sales and maximize revenue. This is primarily due to the benefits offered by the ASEAN Economic Community (AEC). The market liberalization that the AEC offers through various free trade agreements within ASEAN enables companies to enjoy exporting without tariffs.

The move by BMW highlights the benefits that the AEC provides. Dezan Shira & Associates believe that companies that use AEC market benefits as a strategic tool within ASEAN stand to gain significantly.

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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asean@dezshira.com or visit www.dezshira.com.

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