Given the government’s New Southbound Policy, Indonesia and the Philippines are the ideal markets in ASEAN for Taiwanese companies, DBS Bank Ltd officials said on Friday.
Indonesia is backed up with stable demand in its vast domestic market, and its imports of capital goods are expected to begin to recover and post growth in the second half of this year, DBS economist Irvin Seah (謝光威) told a news conference in Taipei.
While Indonesia’s inflation rate is expected to rise from 3.5 percent last year to 4.5 percent this year, the increase is within the target range of its central bank, Seah said.
The strength of the Indonesian rupiah would remain stable this year, as the Indonesian central bank has been building up its foreign currency reserves while aiming to prevent excessive appreciation, Seah said.
He expects Indonesia’s GDP growth to reach 5.4 percent next year, up from 5.1 percent this year.
Consumption and investment growth have also stayed robust in the Philippines, after foreign direct investment into the country last year rose 40 percent annually to US$7.9 billion.
Despite concerns about political uncertainty in the country, its government has proven to be effective in implementing policies, such as infrastructure investments that would further boost its economy, Seah said.
However, the bank’s analysts have predicted GDP growth in the Philippines would slide slightly from 6.7 percent this year to 6.4 percent next year, he said.
The bank’s outlook for Vietnam is more reserved because of rising concerns about systemic risks as Hanoi tries to stimulate GDP growth.
After missing its growth target last year, the Vietnamese government initiated a wave of credit expansion that could lead to asset quality deterioration for lenders, Seah said.
The Vietnamese central bank estimates the nation’s overall debt delinquency rate is 8.9 percent, even though official agencies have said it is just 2.9 percent, Seah said.
In the first half of this year, Vietnam’s trade deficit soared three times higher than it was a year ago, which is likely to lead to further depreciation of the Vietnamese dong, he said.
Foreign firms would be affected by elevated controls over foreign fund outflows as the government reacts to further weakening of the dong, he said.
Overall, Taiwanese companies should examine their competitive advantages before venturing into ASEAN markets, Seah said.
Companies should first set up representative offices to gather intelligence and learn the lay of the land, as market landscapes vary greatly between ASEAN members, he said.
The service sector is an ideal sector for Taiwanese firms looking to venture into the region, given that a number of food processing, beverage and restaurant operators with strong brand images have done well in ASEAN markets, he said.
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