1. Understanding Emerging Markets Presented By: Gaurav Dutta DM15219 Prathyusha RaviproluDM15242

2. State of Asian economies Change in the structure of the economy from agriculture to manufacturing and services for most of the economies Political tension in Middle East, instability in Thailand, change in regime in Indonesia Emergence of power centers – China, India, ASEAN, etc. Huge investment in infrastructure, health care, education, manufacturing and technology sector Social inequality – high Gini coefficient, increasing urbanization, rising middle class, high birth rates, cheap labor Focus on manufacturing sectors, service sector and value addition industries Export oriented, high forex reserves, high inflation, huge potential market Signing of the large number of pacts with each other and outside Asia – FTA, CEPA, etc.; increasing regional grouping – ASEAN, SCO, SAARC, BIMSTEC, etc. Slowing growth in China is having an impact on Asian countries Diversification of trade portfolios by Asian countries in Latin America, Africa to reduce the dependence on few countries ASEAN steps towards monetary integration Conflicts among countries like India – Pakistan, maritime conflicts of China – Japan, China – Vietnam – Philippines, etc. Military modernizations and arms race

3. Why ASEAN? Aggregate economic size of USD2.4 trillion A market size of 616 million Average GDP growth of 5.4% versus approx. 4% worldwide 25% of the total trade was intra-regional High working population Biggest production base after China Rising strength of middle class; 55 million skilled workers in Indonesia alone Rising labor costs in China will force investors to look to ASEAN Huge natural resources reserve that include palm oil, nickel, tin, natural gas Evidence- Japanese Direct Investment in ASEAN increased by 55.4% to USD10.29 billion; At the same time, it decreased by 31.1% to USD4.93 billion

4. ASEAN TRADE 48% to 74% of the total exports to extra ASEAN amount to approx. $680693mn Based on improved facilities under Manufacturing and Finance industries. Jump in Manufacturing attractiveness index credited to availability of: Low cost Labor Nascent Manufacturing sectors Proximity to China EXPORTS Approx. 72% still being sourced from extra ASEANs Lack of skilled labor Lack of Latest Technology Underdeveloped Manufacturing and Services IMPORTS

5. CONSTRAINTS INDONESIA The Dutch disease Poor education and infrastructure, Labor underutilization, unemployment and underemployment Untapped geothermal resources Corruption, Political system is fragmented THAILAND Private sector credits have been growing at a slow pace. Euro debt crisis and fragile US recovery continue to weigh on global growth Political Institutions-excessive bureaucracy Middle-Income Trap Less infrastructure investment The hike in exchange rates of recipient economies affects the prospect of growth momentum PHILIPPINES It is mostly rural, agricultural, and suffers from low productivity Commercial, regulatory, and labor market distortions Poor physical infrastructure High corruption levels- Unclear law on labor & land policies Uneven Growth and Job Creation Volatile and unpredictable shifts in national politics affects foreign investments SINGAPORE lack of open space sky rocketing property prices increasing cost of living reliance on foreign labor Government power over media MALAYSIA Race relations complicate policy formulation Political uncertainty hurts foreign investor confidence Preference to local industries; Foreign investments likely to stay away Underlying corruption-both real and perceived

6. Competition from CHINA & INDIA Host of production networks Both receive large amounts of FDI Both are single markets and production bases Maritime disputes in the South China Sea threaten to turn each ASEAN meeting into a tug of war between anti- and pro-China forces The rise of India and China as military powers poses a security threat to ASEAN countries English has been chosen as the lingua franca; could be a threat to multilingualism