ASEAN Economies and China Dependency

Index:

General introduction

Indonesia

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

Thailand

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

Singapore

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

Philippines

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

Vietnam

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

Malaysia

1. Introduction
2. Business Environment as of 2024
3. Industrial Parks as of 2024
4. Major Industries as of 2024
5. Emerging Industries as of 2024
6. Economic Performance: The Last 3 Years
7. Economic Targets for the Next 2 Years
8. Dependency on China

General introduction

The six largest economies in the Association of Southeast Asian Nations (ASEAN)—Indonesia, Thailand, Singapore, the Philippines, Vietnam, and Malaysia—play a pivotal role in the region's economic landscape. These countries exhibit diverse economic structures, ranging from manufacturing and agriculture to high-tech industries and financial services. Each nation maintains significant trade and supply chain linkages with China, leveraging this relationship for growth while actively pursuing diversification to enhance economic resilience. This analysis explores their economic dependencies on China, focusing on trade, supply chain dynamics, and future strategies for managing these relationships.

Indonesia

1. Introduction

Indonesia, as the largest economy in ASEAN, stands at a nominal GDP of approximately USD 1.48 trillion in 2024. The nation is not only rich in natural resources, such as coal, palm oil, and minerals, but also boasts a young and growing population of over 270 million people, providing a robust domestic market. The Indonesian economy has been marked by steady growth driven by a combination of domestic consumption, investments, and exports. The government has been focusing on infrastructure development and regulatory reforms to support economic growth and diversification.

2. Business Environment as of 2024

Indonesia's business environment has seen significant improvements, particularly in reducing regulatory burdens and enhancing the ease of doing business. The country ranked 73rd in the World Bank's Ease of Doing Business Index, reflecting progress in areas like starting a business, obtaining construction permits, and paying taxes. Key reforms include the implementation of the Omnibus Law on Job Creation, which aims to streamline regulations and attract more foreign direct investment (FDI).

The investment climate in Indonesia is bolstered by its membership in key regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN Economic Community (AEC). These agreements facilitate market access and reduce trade barriers, making Indonesia an attractive destination for investors looking to enter the Southeast Asian market.

3. Industrial Parks as of 2024

Indonesia's industrial parks play a crucial role in its economic development, providing the necessary infrastructure and facilities for manufacturing and export-oriented industries. Key industrial parks include the Batamindo Industrial Park in Batam, which focuses on electronics and automotive components, and the Java Integrated Industrial and Ports Estate (JIIPE) in East Java, which hosts a variety of industries including chemicals, logistics, and food processing.

The government supports these zones with incentives such as tax holidays, duty exemptions on imported machinery, and simplified licensing procedures. These incentives are part of broader efforts to attract investment and enhance Indonesia's industrial base, with a particular focus on high-tech and value-added industries.

4. Major Industries as of 2024

Indonesia's major industries include:

• Agriculture: A significant contributor to the economy, particularly in palm oil, rubber, and coffee. The country is the world's largest producer of palm oil.
• Mining and Energy: Indonesia is rich in natural resources, including coal, oil, natural gas, and minerals like tin and copper. The mining sector is a major export earner.
• Manufacturing: The sector includes the production of textiles, automotive components, and electronics. Indonesia aims to expand its manufacturing base, particularly in high-tech and value-added sectors.
• Services: The services sector, including finance, telecommunications, and tourism, has been growing rapidly. The tourism sector, in particular, has become a key driver of economic growth, with the government promoting destinations beyond Bali to diversify its tourism offerings.

5. Emerging Industries as of 2024

Indonesia's emerging industries include:

• Digital Economy: The country has seen rapid growth in e-commerce, fintech, and digital services. The government has been promoting digital infrastructure and innovation through initiatives like Indonesia's Digital Economy 2025.
• Renewable Energy: Indonesia is investing in renewable energy sources, such as geothermal, solar, and hydropower, to diversify its energy mix and reduce reliance on fossil fuels. The country has significant potential in geothermal energy, with plans to expand capacity significantly.
• Creative Economy: Including industries such as film, fashion, and digital content, which are gaining international recognition. The government has established the Creative Economy Agency to support growth in this sector.

6. Economic Performance: The Last 3 Years

Indonesia's economic performance over the last three years has been marked by resilience despite global economic challenges. The country managed to maintain an average GDP growth rate of around 5%, supported by strong domestic consumption and government spending. Key growth drivers included infrastructure development projects, which were part of the government's National Medium-Term Development Plan, and a robust export sector, particularly in commodities.

Challenges included managing inflation, which was influenced by global commodity prices and domestic factors such as food supply disruptions. Additionally, external factors like global trade tensions and the COVID-19 pandemic posed risks to economic stability.

7. Economic Targets for the Next 2 Years and Expected Contributors

Indonesia aims to achieve a GDP growth rate of 5.5-6% over the next two years. The government's economic plans focus on several key areas:

• Infrastructure Development: Continued investment in transportation, energy, and digital infrastructure to support economic growth and improve connectivity across the archipelago.
• Industrial Diversification: Encouraging the development of high-tech and value-added industries to reduce dependence on commodity exports and enhance economic resilience.
• Sustainable Development: Promoting renewable energy and sustainable practices across sectors to support long-term economic and environmental sustainability.
• Human Capital Development: Enhancing education and vocational training to improve workforce skills and productivity.

The government also targets significant improvements in the ease of doing business and investment climate to attract more FDI, particularly in sectors like manufacturing, digital economy, and renewable energy.

Thailand

1. Introduction

Thailand, with a nominal GDP of approximately USD 548.89 billion, is a key economy in Southeast Asia. The country has a diverse economic base, including strong sectors in manufacturing, tourism, and agriculture. Thailand is known for its strategic location in the region, acting as a hub for trade and investment. The Thai economy has shown resilience, with steady growth driven by domestic consumption, exports, and foreign investment.

2. Business Environment as of 2024

Thailand's business environment has been gradually improving, with reforms aimed at reducing regulatory burdens and enhancing the ease of doing business. The country ranked 21st in the World Bank's Ease of Doing Business Index, reflecting its efforts to simplify business registration, protect minority investors, and improve access to credit.

The investment climate in Thailand is supported by its strategic location, well-developed infrastructure, and numerous free trade agreements (FTAs) with major economies. The government offers incentives such as tax holidays, reduced tariffs, and investment grants to attract FDI, particularly in high-value industries like electronics, automotive, and biotechnology.

3. Industrial Parks as of 2024

Thailand's industrial parks are a cornerstone of its manufacturing sector. The Eastern Economic Corridor (EEC) is a flagship project aimed at transforming the country's eastern seaboard into a high-tech industrial hub. The EEC focuses on industries such as aviation, biotechnology, digital, and robotics, offering incentives like land ownership rights and tax exemptions to foreign investors.

Other notable industrial parks include the Amata City Industrial Estate, known for automotive and electronics manufacturing, and the Map Ta Phut Industrial Estate, which specializes in petrochemicals and heavy industries. These parks provide state-of-the-art infrastructure and logistics support, facilitating efficient operations for businesses.

4. Major Industries as of 2024

Thailand's major industries include:

• Automotive: Thailand is the largest automotive producer in Southeast Asia, known as the "Detroit of Asia." The sector includes major global manufacturers and a robust supply chain network.
• Electronics: The country is a leading exporter of electronics and electrical appliances, with significant production of hard disk drives, integrated circuits, and consumer electronics.
• Tourism: A vital sector contributing to GDP and employment. Thailand is a popular destination for international tourists, known for its cultural heritage, natural beauty, and hospitality.
• Agriculture: Although its relative share of GDP has declined, agriculture remains important, with major products including rice, rubber, and tropical fruits.

5. Emerging Industries as of 2024

Emerging industries in Thailand include:

• Digital Economy: The government is promoting digital transformation through initiatives like Thailand 4.0, which aims to transition the economy to one driven by innovation and technology. This includes the development of smart cities, e-commerce, and digital healthcare.
• Biotechnology and Pharmaceuticals: Thailand is investing in biotechnology, focusing on agricultural biotech, healthcare, and pharmaceuticals. The country aims to become a regional hub for medical tourism and healthcare services.
• Renewable Energy: Thailand is advancing in renewable energy, particularly solar and biomass. The government has set ambitious targets to increase the share of renewables in the energy mix, supported by incentives and regulatory frameworks.

6. Economic Performance: The Last 3 Years

Thailand's economic performance has been stable, with GDP growth averaging around 3-4% annually. The country has benefitted from strong export performance, particularly in electronics and automotive parts, as well as a recovery in the tourism sector post-pandemic. Domestic consumption and government spending on infrastructure projects have also supported growth.

However, Thailand faces challenges such as an aging population, which could impact labor supply and productivity, and geopolitical uncertainties that could affect trade and investment. The government has been addressing these issues through policies aimed at boosting productivity, innovation, and workforce skills.

7. Economic Targets for the Next 2 Years and Expected Contributors

The Thai government targets a GDP growth rate of 4-5% over the next two years, focusing on:

• Infrastructure Development: Major projects under the EEC, including high-speed rail, port expansions, and airport upgrades, are expected to drive growth and enhance connectivity.
• Digital and High-Tech Industries: Continued investment in digital infrastructure and innovation to support the growth of high-tech industries.
• Tourism and Services: Efforts to diversify tourism offerings and improve service quality to attract higher-spending tourists and extend their stays.
• Sustainability and Green Growth: Initiatives to promote sustainable development, including investment in renewable energy and environmental conservation.

The government is also focusing on improving the regulatory environment and increasing support for SMEs to enhance their competitiveness in the global market.

Singapore

1. Introduction

Singapore, with a nominal GDP of approximately USD 525.23 billion, is a global financial hub and one of the most developed economies in the world. Known for its strategic location, highly skilled workforce, and strong regulatory framework, Singapore has a diversified economy with significant contributions from financial services, manufacturing, and trade. The city-state's economic policies are characterized by a focus on innovation, competitiveness, and sustainability.

2. Business Environment as of 2024

Singapore consistently ranks among the top in the world for ease of doing business. The country offers a highly efficient regulatory environment, strong intellectual property protection, and a pro-business government. It ranked 2nd in the World Bank's Ease of Doing Business Index, reflecting its streamlined processes for starting a business, enforcing contracts, and trading across borders.

The investment climate in Singapore is bolstered by a network of free trade agreements (FTAs), bilateral investment treaties, and its membership in major economic blocs like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The government offers various incentives, such as tax exemptions and grants, to attract FDI, particularly in high-value industries such as biotechnology, information technology, and finance.

3. Industrial Parks as of 2024

Singapore's industrial parks are key to its economic strategy, focusing on high-tech and knowledge-intensive industries. Notable industrial parks include:

• Jurong Island: A hub for petrochemicals and energy industries, hosting some of the world's largest chemical companies. It is a model of integrated infrastructure and logistics.
• One-North: A development dedicated to research and development in biomedical sciences, infocomm technology, and media. It houses research institutions, corporate labs, and startups, fostering a vibrant ecosystem for innovation.
• Changi Business Park: Focuses on logistics, financial services, and IT. It is strategically located near Changi Airport, providing seamless connectivity for businesses.

These parks are supported by state-of-the-art infrastructure, world-class research facilities, and strong government support.

4. Major Industries as of 2024

Singapore's major industries include:

• Financial Services: Singapore is a leading financial center in Asia, known for its robust banking system, wealth management services, and a thriving fintech ecosystem. The financial sector contributes significantly to GDP and employment.
• Manufacturing: Despite its small size, Singapore is a major player in high-tech manufacturing, particularly in electronics, pharmaceuticals, and precision engineering. The city-state is a leading producer of semiconductors and medical devices.
• Trade and Logistics: Singapore's strategic location and excellent port infrastructure make it a critical hub for global trade. The logistics sector is highly developed, supporting trade and supply chain management.
• Tourism: While smaller compared to other sectors, tourism is a vital industry, attracting millions of visitors annually. Singapore is known for its world-class attractions, business events, and medical tourism.

5. Emerging Industries as of 2024

Emerging industries in Singapore include:

• Digital Economy: The government has launched initiatives like the Smart Nation program to promote digital innovation across all sectors. This includes the development of smart infrastructure, data analytics, and cybersecurity.
• Biotechnology and Life Sciences: Singapore is investing heavily in biotechnology and life sciences, aiming to become a global hub for biomedical research and healthcare innovation. The country is home to leading research institutions and biotech companies.
• Sustainable Technologies: The focus on sustainability is growing, with investments in clean energy, green building technologies, and water management solutions. Singapore aims to be a leader in sustainable urban development.

6. Economic Performance: The Last 3 Years

Singapore's economy has shown resilience and adaptability over the past three years, with a moderate GDP growth rate despite global uncertainties. The financial services sector has been a consistent performer, supported by growth in wealth management and digital banking. The manufacturing sector, particularly in electronics and biomedical sciences, has also been strong.

Challenges include managing the impacts of global trade tensions and navigating the transition to a more digital and sustainable economy. The government has been proactive in addressing these challenges, implementing policies to enhance productivity, innovation, and workforce skills.

7. Economic Targets for the Next 2 Years and Expected Contributors

Singapore's economic strategy for the next two years focuses on:

• Digital Transformation: Accelerating the adoption of digital technologies across all sectors, with a focus on artificial intelligence, cybersecurity, and data analytics.
• Sustainable Development: Promoting green technologies and sustainable practices, including plans to reduce carbon emissions and enhance energy efficiency.
• Global Competitiveness: Strengthening Singapore's position as a global financial and trade hub, including expanding its network of FTAs and enhancing its infrastructure.
• Innovation and R&D: Increasing investment in research and development to drive innovation in emerging sectors such as biotechnology, fintech, and smart city solutions.

The government aims to achieve a GDP growth rate of 3-4%, focusing on maintaining economic stability and enhancing the quality of life for its residents.

Philippines

1. Introduction

The Philippines, with a nominal GDP of about USD 471.52 billion, is one of the fastest-growing economies in ASEAN. The country has a young and growing population, providing a large labor force and a significant consumer market. The economy is characterized by a dynamic services sector, strong remittance inflows from overseas Filipino workers (OFWs), and a burgeoning industrial base.

2. Business Environment as of 2024

The Philippines has been working to improve its business environment, focusing on regulatory reforms, infrastructure development, and ease of doing business. The country ranked 95th in the World Bank's Ease of Doing Business Index, with improvements in areas such as starting a business and resolving insolvency.

The investment climate is supported by government incentives, including tax holidays, duty exemptions, and simplified business processes. The Philippines is a member of several regional trade agreements, including the RCEP, which helps facilitate trade and investment in the region. The country also offers various economic zones, managed by the Philippine Economic Zone Authority (PEZA), which provide additional benefits for investors.

3. Industrial Parks as of 2024

Industrial parks in the Philippines are integral to its economic development strategy. These parks, managed by PEZA, host a range of industries from electronics to automotive parts and business process outsourcing (BPO). Key industrial parks include:

• Clark Freeport Zone: A major hub for logistics, aviation, and manufacturing. It is strategically located near Clark International Airport, providing excellent connectivity.
• Cavite Economic Zone: Focuses on electronics and semiconductor manufacturing, housing major multinational corporations.
• Subic Bay Freeport Zone: Known for its shipbuilding, logistics, and tourism industries.

These zones offer various incentives, including tax holidays, duty-free importation of raw materials, and exemption from local taxes.

4. Major Industries as of 2024

The Philippines' major industries include:

• Business Process Outsourcing (BPO): A leading sector, providing significant employment and contributing to GDP. The Philippines is a global leader in voice-based services and is expanding into high-value services like IT and knowledge process outsourcing.
• Electronics: The largest export sector, with products such as semiconductors and electronic components. The industry is supported by a skilled workforce and a growing ecosystem of suppliers and service providers.
• Agriculture: Although its share of GDP has declined, agriculture remains vital, particularly in areas like coconut, rice, and fisheries. The sector also supports a significant portion of the population.
• Tourism: An important sector, contributing to GDP and employment. The Philippines is known for its natural beauty, including beaches and diving spots, which attract millions of tourists annually.

5. Emerging Industries as of 2024

Emerging industries in the Philippines include:

• Fintech: The Philippines has seen rapid growth in fintech, driven by a large unbanked population and high mobile penetration. The government supports the sector through regulatory sandboxes and fintech-friendly policies.
• E-commerce: The sector has grown significantly, boosted by increasing internet penetration and a young, tech-savvy population. The government is promoting digital infrastructure to support this growth.
• Renewable Energy: The country is investing in renewable energy sources, particularly solar, wind, and geothermal. The government aims to increase the share of renewables in the energy mix to reduce reliance on fossil fuels.

6. Economic Performance: The Last 3 Years

The Philippines has experienced robust economic growth over the last three years, with an average GDP growth rate of around 6%. Key drivers include domestic consumption, which accounts for a significant portion of GDP, and remittances from OFWs, which support household spending.

Challenges include managing inflation, particularly food and energy prices, and addressing infrastructure bottlenecks. The government has launched the "Build, Build, Build" program, focusing on infrastructure development to support long-term growth. External factors, such as global economic uncertainties and natural disasters, also pose risks.

7. Economic Targets for the Next 2 Years and Expected Contributors

The Philippine government targets a GDP growth rate of 6-7% over the next two years. Key areas of focus include:

• Infrastructure Development: Continued investment in transportation, energy, and digital infrastructure to support economic growth and improve connectivity.
• Industrialization and Manufacturing: Enhancing the competitiveness of the manufacturing sector, particularly in electronics, automotive, and textiles.
• Digital Transformation: Promoting digitalization across all sectors, with a focus on fintech, e-commerce, and ICT services.
• Human Capital Development: Improving education and vocational training to enhance workforce skills and productivity.

The government also aims to enhance the business environment by reducing regulatory burdens and increasing support for SMEs. Efforts to improve public health and social services are also expected to contribute to sustainable economic growth.

Vietnam

1. Introduction

Vietnam, with a nominal GDP of approximately USD 465.81 billion, is one of the fastest-growing economies in Southeast Asia. The country has transitioned from a centrally planned economy to a market-oriented economy, achieving remarkable economic growth and poverty reduction. Vietnam's economy is characterized by a young workforce, a growing middle class, and strong export-oriented industries.

2. Business Environment as of 2024

Vietnam has been making significant strides in improving its business environment. The country ranked 70th in the World Bank's Ease of Doing Business Index, with improvements in areas such as starting a business, getting credit, and trading across borders. The government has been focusing on regulatory reforms, transparency, and reducing bureaucratic red tape.

The investment climate in Vietnam is supported by a stable political environment, strategic location, and various free trade agreements, including the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements enhance market access and make Vietnam an attractive destination for foreign investors.

3. Industrial Parks as of 2024

Vietnam's industrial parks are a vital component of its economic strategy, attracting foreign direct investment and supporting export-oriented industries. Key industrial parks include:

• Saigon Hi-Tech Park: A hub for high-tech industries, including electronics, IT, and biotechnology. It hosts major multinational companies and research institutions.
• Bac Ninh Industrial Park: Known for electronics and semiconductor manufacturing. The park is home to major global electronics companies.
• Hoa Lac Hi-Tech Park: Focuses on technology and innovation, hosting industries such as ICT, biotechnology, and new materials.

These parks benefit from incentives such as tax exemptions, land rental reductions, and support for infrastructure development.

4. Major Industries as of 2024

Vietnam's major industries include:

• Electronics and Electrical Appliances: Vietnam is a major exporter of electronics, particularly smartphones and components. The industry is a key driver of economic growth and employment.
• Textiles and Garments: The textile and garment industry is a significant export sector, supported by a large labor force and competitive production costs.
• Agriculture: Vietnam is a leading exporter of agricultural products, including coffee, rice, and seafood. The sector is vital for rural employment and export earnings.
• Tourism: A growing sector, attracting millions of international visitors each year. Vietnam is known for its rich cultural heritage, natural beauty, and diverse landscapes.

5. Emerging Industries as of 2024

Emerging industries in Vietnam include:

• Digital Economy: Vietnam's digital economy is expanding rapidly, with growth in e-commerce, fintech, and digital services. The government is promoting digital infrastructure and innovation through initiatives like the National Digital Transformation Program.
• Renewable Energy: Vietnam is investing in renewable energy, particularly solar and wind power. The government has set ambitious targets for renewable energy capacity, supported by favorable policies and investment incentives.
• High-Tech Agriculture: The government is promoting the adoption of high-tech solutions in agriculture to increase productivity and sustainability. This includes smart farming, biotechnology, and advanced irrigation systems.

6. Economic Performance: The Last 3 Years

Vietnam's economy has been one of the most dynamic in the region, with GDP growth averaging around 7% annually. The country has been resilient in the face of global challenges, including the COVID-19 pandemic, which it managed to contain effectively, allowing for a quicker economic recovery.

Key drivers of growth include strong exports, particularly in electronics and textiles, and robust domestic consumption. The government has been investing in infrastructure and human capital to support long-term growth. Challenges include managing inflation, particularly in the context of rising global commodity prices, and addressing environmental concerns.

7. Economic Targets for the Next 2 Years and Expected Contributors

Vietnam aims to achieve GDP growth of 6-7% over the next two years. Key focus areas include:

• Industrialization and Modernization: Promoting the development of high-tech and value-added industries, including electronics, automotive, and advanced manufacturing.
• Infrastructure Development: Continued investment in transportation, energy, and digital infrastructure to support economic growth and improve connectivity.
• Digital Transformation: Enhancing digital infrastructure and promoting the adoption of digital technologies across all sectors.
• Green Growth and Sustainability: Implementing policies to promote renewable energy, environmental conservation, and sustainable development.

The government also aims to improve the business environment by reducing regulatory barriers, enhancing transparency, and supporting SMEs. Efforts to improve education and healthcare services are expected to contribute to social development and economic resilience.

Malaysia

1. Introduction

Malaysia, with a nominal GDP of around USD 445.52 billion, is a diverse and open economy in Southeast Asia. The country is known for its strategic location, skilled workforce, and well-developed infrastructure. Malaysia has a diverse economic base, including electronics, oil and gas, and palm oil production. The government has been focusing on economic diversification and enhancing competitiveness.

2. Business Environment as of 2024

Malaysia offers a relatively open and business-friendly environment, with strong infrastructure, a skilled workforce, and a robust legal system. The country ranked 12th in the World Bank's Ease of Doing Business Index, reflecting its efficient business environment, strong investor protection, and ease of trading across borders.

The investment climate is supported by various incentives, including tax holidays, investment allowances, and grants for R&D. Malaysia is a member of several regional trade agreements, including the CPTPP and the ASEAN Free Trade Area (AFTA), which enhance its trade and investment linkages. The government has also launched initiatives to promote digital transformation and innovation, such as the Malaysia Digital Economy Blueprint.

3. Industrial Parks as of 2024

Malaysia's industrial parks are a critical component of its economic strategy, hosting key industries such as electronics, automotive, and pharmaceuticals. Notable industrial parks include:

• Penang Industrial Zone: Known as the "Silicon Valley of the East," this zone is a hub for electronics and semiconductor manufacturing. It hosts major global tech companies and is supported by a strong supply chain ecosystem.
• Klang Valley: A major industrial and commercial hub, focusing on automotive, pharmaceuticals, and consumer goods. It is strategically located near Kuala Lumpur, providing excellent connectivity and access to markets.
• Iskandar Malaysia: A special economic zone in Johor, focusing on logistics, manufacturing, and education. It is part of the government's plan to attract high-value industries and international investors.

These parks offer state-of-the-art infrastructure, logistical support, and government incentives to attract investment.

4. Major Industries as of 2024

Malaysia's major industries include:

• Electronics and Electrical: A leading sector, contributing significantly to GDP and exports. Malaysia is a major producer of semiconductors, electronic components, and consumer electronics.
• Oil and Gas: The country has substantial reserves of oil and natural gas, making it a major player in the energy sector. Malaysia is also a leading exporter of liquefied natural gas (LNG).
• Palm Oil: Malaysia is one of the largest producers and exporters of palm oil, a key agricultural commodity. The industry plays a vital role in the economy, providing employment and export earnings.
• Tourism: An important sector, attracting millions of visitors annually. Malaysia is known for its cultural diversity, natural beauty, and world-class infrastructure.

5. Emerging Industries as of 2024

Emerging industries in Malaysia include:

• Digital Economy: The government is promoting digital transformation through initiatives like the Malaysia Digital Economy Blueprint. This includes the development of digital infrastructure, e-commerce, fintech, and digital content.
• Green Technologies: Malaysia is investing in green technologies, including renewable energy, green buildings, and sustainable agriculture. The government has set targets for increasing the share of renewables in the energy mix.
• Biotechnology: The biotechnology sector is growing, with a focus on agricultural biotech, healthcare, and pharmaceuticals. The government supports this sector through funding, research grants, and regulatory frameworks.

6. Economic Performance: The Last 3 Years

Malaysia's economy has shown resilience, with GDP growth averaging around 4-5% annually. The country has benefitted from strong export performance, particularly in electronics and oil and gas. Domestic consumption and investment in infrastructure have also supported growth.

Challenges include managing external economic pressures, such as global trade tensions and fluctuating commodity prices. The government has been focusing on economic diversification, improving the business environment, and promoting innovation to address these challenges.

7. Economic Targets for the Next 2 Years and Expected Contributors

The Malaysian government targets a GDP growth rate of 4-5% over the next two years, focusing on:

• Economic Diversification: Reducing dependence on traditional industries and promoting high-value sectors like digital economy, green technologies, and biotechnology.
• Infrastructure Development: Continued investment in transportation, energy, and digital infrastructure to support economic growth and enhance connectivity.
• Human Capital Development: Improving education and vocational training to enhance workforce skills and productivity.
• Sustainability and Green Growth: Promoting sustainable practices, including renewable energy development and environmental conservation.

The government is also focusing on enhancing the ease of doing business, supporting SMEs, and improving public services to create a more conducive environment for economic growth and social development.

Dependency on China trade and Supply Chains

Indonesia

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: Indonesia and China have a robust trade relationship, with China being Indonesia's largest trading partner. The bilateral trade volume has consistently increased over the past three years, reaching approximately USD 78.5 billion in 2021, USD 85.4 billion in 2022, and around USD 91 billion in 2023.
• Export and Import Composition: Indonesian exports to China predominantly include natural resources such as coal, palm oil, rubber, and minerals. These commodities accounted for over 60% of Indonesia's exports to China. On the import side, Indonesia relies heavily on China for machinery, electronics, textiles, and chemical products, which are essential for its manufacturing and industrial sectors.

2. Supply Chain Dependencies

• Industrial Inputs: Indonesia's manufacturing sector heavily depends on China for raw materials, intermediate goods, and capital equipment. Key sectors include electronics, textiles, and automotive, where Chinese components are critical.
• Investment and Technology Transfer: Chinese investments in Indonesia, particularly in infrastructure and industrial projects, have increased significantly. The Belt and Road Initiative (BRI) projects, such as the Jakarta-Bandung high-speed railway, highlight the extent of Chinese involvement in Indonesia’s infrastructure development.

3. Future Expectations (Next 2 Years)

• Continued Trade Growth: The trade relationship is expected to grow further, with China remaining a crucial market for Indonesian commodities and a primary source of industrial inputs. The Indonesian government aims to increase exports of value-added products to China, reducing reliance on raw materials.
• Diversification and Strategic Partnerships: While Indonesia will continue to rely on China, there is a growing emphasis on diversifying trade and investment sources. Indonesia is actively seeking to strengthen economic ties with other ASEAN members, Japan, South Korea, and India to reduce over-dependence on China.
• Supply Chain Resilience: Efforts are being made to build more resilient supply chains, including domestic production of critical components and attracting foreign investment in high-tech industries to reduce reliance on Chinese imports.

Thailand

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: Thailand has a significant trade relationship with China, its largest trading partner. The bilateral trade volume was approximately USD 80 billion in 2021, USD 87 billion in 2022, and reached around USD 92 billion in 2023.
• Export and Import Composition: Thai exports to China mainly consist of electronic components, rubber, chemicals, and agricultural products such as fruits and seafood. In return, Thailand imports machinery, electrical appliances, chemicals, and textiles from China.

2. Supply Chain Dependencies

• Manufacturing Sector: The electronics and automotive sectors in Thailand are particularly reliant on Chinese components and raw materials. This includes semiconductors, which are crucial for Thailand's electronics manufacturing, and automotive parts.
• Agriculture and Food Processing: China is a major importer of Thai agricultural products, including rubber and fruits. This relationship has significant implications for Thailand's agricultural sector and food processing industry.

3. Future Expectations (Next 2 Years)

• Trade Diversification: While China will remain a key partner, Thailand is exploring opportunities to expand trade with other countries, including those in the CPTPP and RCEP. The Thai government is also encouraging domestic industries to develop new markets and reduce reliance on any single country.
• Supply Chain Resilience: Thailand aims to increase domestic production capabilities, especially in high-tech industries. This includes attracting foreign direct investment in sectors like electronics and automotive to reduce dependency on imports from China.
• Investment in Innovation: There is a strategic push towards innovation and the development of new technologies, with the Thai government promoting initiatives under the Thailand 4.0 framework. This includes fostering sectors like biotechnology, digital economy, and smart manufacturing, which could reduce reliance on Chinese technology and inputs.

Singapore

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: Singapore has a highly developed and mature trade relationship with China, one of its largest trading partners. The trade volume between the two countries was approximately USD 95 billion in 2021, USD 103 billion in 2022, and around USD 110 billion in 2023.
• Export and Import Composition: Singapore exports a wide range of products to China, including electronics, chemicals, machinery, and refined petroleum products. Imports from China include electronics, machinery, and consumer goods.

2. Supply Chain Dependencies

• Electronics and Semiconductors: Singapore’s electronics and semiconductor industries are significantly integrated with China’s supply chains. Many Singaporean firms rely on Chinese suppliers for components and raw materials.
• Trade and Logistics: As a major global trade hub, Singapore plays a critical role in facilitating trade between China and the rest of the world. This includes serving as a logistics and distribution center for Chinese products.

3. Future Expectations (Next 2 Years)

• Enhanced Economic Cooperation: Singapore and China are expected to continue deepening their economic cooperation, including in areas like digital economy, financial services, and innovation. Singapore’s strategic location and its role as a financial hub make it an attractive partner for China.
• Diversification and Strategic Partnerships: Singapore is actively seeking to diversify its trade relationships. It is enhancing economic ties with other major economies like the United States, the European Union, and Japan. The Singapore government is also promoting initiatives to strengthen supply chain resilience.
• Technology and Innovation: Singapore is investing heavily in technology and innovation, including smart city technologies, fintech, and biotech. This focus is partly aimed at reducing dependency on any single market or supplier, including China, by fostering a more self-sufficient and resilient economic base.

Philippines

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: The Philippines has a growing trade relationship with China, which is its largest trading partner. The bilateral trade volume was approximately USD 35 billion in 2021, USD 38 billion in 2022, and around USD 41 billion in 2023.
• Export and Import Composition: Major exports to China include electronic products, mineral products, and agricultural goods like bananas and pineapples. Imports from China include electronic equipment, machinery, and consumer goods.

2. Supply Chain Dependencies

• Electronics and Semiconductors: The Philippines' electronics industry, which is a significant part of its exports, relies heavily on components and raw materials imported from China.
• Consumer Goods and Machinery: The Philippines imports a substantial amount of consumer goods and machinery from China, which are critical for its domestic market and industrial sectors.

3. Future Expectations (Next 2 Years)

• Strengthening Trade Ties: The Philippines is likely to continue strengthening its trade ties with China, given the size and proximity of the Chinese market. However, the government is also exploring diversification strategies.
• Infrastructure and Investment: Chinese investment in Philippine infrastructure projects, as part of the Belt and Road Initiative, is expected to continue. This includes investments in energy, transport, and industrial infrastructure.
• Supply Chain Resilience and Diversification: The Philippines is focusing on building more resilient supply chains, including increasing domestic production of critical goods and exploring alternative suppliers from other countries. There is also a push to develop higher-value industries domestically, such as IT services and biotechnology.

Vietnam

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: Vietnam and China have a strong trade relationship, with China being Vietnam's largest trading partner. The trade volume was approximately USD 133 billion in 2021, USD 147 billion in 2022, and around USD 155 billion in 2023.
• Export and Import Composition: Vietnam exports a variety of goods to China, including electronics, textiles, and agricultural products. Imports from China include machinery, electronics, fabrics, and chemicals, which are crucial for Vietnam’s manufacturing sector.

2. Supply Chain Dependencies

• Manufacturing Sector: Vietnam's manufacturing sector, particularly in electronics and textiles, is highly dependent on Chinese inputs. This includes raw materials, components, and machinery.
• Agriculture: China is a significant market for Vietnamese agricultural products, including fruits, seafood, and rice. The relationship is important for Vietnam's agricultural sector.

3. Future Expectations (Next 2 Years)

• Trade and Economic Integration: Vietnam is expected to continue strengthening its trade and economic ties with China, leveraging its geographical proximity and trade agreements. However, there is a conscious effort to diversify trading partners and reduce dependency.
• Attracting Foreign Investment: Vietnam is increasingly becoming a destination for foreign investment, including from China, due to its relatively low labor costs and improving infrastructure. The government aims to attract high-tech and value-added industries to reduce reliance on low-cost manufacturing.
• Supply Chain Diversification: The Vietnamese government is actively promoting supply chain diversification and encouraging domestic production of critical components. This includes developing industries such as electronics, automotive, and pharmaceuticals, which can reduce the dependency on Chinese imports.

Malaysia

Dependency on China in Trade and Supply Chains

1. Trade Relations and Statistics (Past 3 Years)

• Bilateral Trade Volume: Malaysia has a substantial trade relationship with China, which is its largest trading partner. The bilateral trade volume was approximately USD 108 billion in 2021, USD 115 billion in 2022, and around USD 120 billion in 2023.
• Export and Import Composition: Malaysia exports electronic goods, palm oil, and petroleum products to China. Imports from China include machinery, electronic components, chemicals, and textiles.

2. Supply Chain Dependencies

• Electronics and Electrical: The Malaysian electronics industry, a major export sector, relies heavily on Chinese inputs, including semiconductors and other components.
• Oil and Gas: Malaysia imports significant quantities of equipment and technology for its oil and gas sector from China. The relationship also includes investments in refining and petrochemicals.

3. Future Expectations (Next 2 Years)

• Deepening Economic Ties: Malaysia is likely to deepen its economic ties with China, focusing on sectors such as high-tech manufacturing, digital economy, and green technology. However, there is also a push towards diversification.
• Belt and Road Initiative (BRI): Chinese investments under the BRI are expected to continue, particularly in infrastructure projects such as ports, railways, and energy. These investments are crucial for Malaysia's economic development.
• Supply Chain and Economic Diversification: The Malaysian government is promoting the diversification of its supply chains and economy, focusing on reducing dependency on any single country, including China. This includes developing domestic industries in digital technologies, biotechnology, and renewable energy to enhance economic resilience.

Final words by Kjeld Friis Munkholm

Here I want to higlight the significant contributions of ASEAN's largest economies to regional and global economic landscapes. We must acknowledge their deep trade and supply chain ties with China, which have been pivotal in driving growth. However, the importance of these nations' proactive measures to diversify their trade relationships and bolster domestic industries, must not be neglegted. This balanced approach is crucial for enhancing economic resilience and ensuring sustainable growth in an increasingly interconnected and uncertain global environment. As these countries navigate complex economic challenges, their strategies will play a key role in shaping the future of ASEAN and its place in the world economy.

Kjeld Friis Munkholm

www.munkholmconsulting.com

? 2024 Kjeld Friis Munkholm. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means without the prior written permission of the author.