01 fraserthompson (alphabeta) v4 - hicap...
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UPDATEAsia at the Crossroads:
5 forces transforming Asia-Pacific regionFraser Thompson, AlphaBeta
Email: [email protected]: www.alphabeta.com
YesA: NoB:
WasNapoleonrelativelyshort?1.
1 100USD2 500USD3 1.000USD4 5,000USD5 10,000USD6
1MillionUSD
50,000USD100.000USD200,000USD500,000USD
78910
1A:
3C:
2B:
NoneoftheaboveD:
Howmanywisemenwerementionedinthebible?2.
1 100USD2 500USD3 1,000USD4 5,000USD5 10,000USD6
1MillionUSD
50,000USD100,000USD200,000USD500,000USD
78910
3secondsA:
3monthsC:
3daysB:
3yearsD:
Howlongisthememoryofgoldfish?3.
1 100USD2 500USD3 1,000USD4 5,000USD5 10,000USD6
1MillionUSD
50,000USD100,000USD200,000USD500,000USD
78910
5
Fivemyths
Goodbyetoglobalization1
Growthwillcomefromtheregion’smegacities2
Whenitcomestotourism,it’sallaboutcapturingtheChineseconsumer3
TechnologydisruptionwillbethesameinAsiaaselsewhere4
Wewillreturnto“business-as-usual”afterafewshocks5
Tradedealsarenotdead!
0
30
60
90
120
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
South-SouthNorth-SouthNorth-North
Numberoftradeagreements(withtradefacilitationcomponents)
6
Whoisinandwhoisout?
RegionalComprehensiveEconomicPartnership(RCEP)
• Cambodia• India• Laos• Myanmar
• HongKong• PapuaNewGuinea• Russia• Taiwan
FreeTradeAreaoftheAsia-Pacific(FTAAP)
• China• Indonesia• Philippines• SouthKorea• Thailand
Trans-PacificPartnership(TPP)• Canada• Chile• Mexico• UnitedStates• Peru
• Australia• Brunei• Japan• Malaysia• NewZealand• Singapore• VietNam
7
TheASEANEconomicCommunity(AEC)movesintoitsnextphase
AECBlueprint2025
Ahighlyintegratedandcohesiveregionaleconomy• Freeflowofgoods• Addressnon-tariffbarriers
• Deepintegrationintradeofservices
• Moreseamlessmovementofinvestment,skilledlabour,businesspersons,andcapital
Competitive,innovative&dynamiccommunity• Digitaltechnology• Innovation• Greentechnology• Goodgovernance• Tacklingcorruption
• Disputeresolution• Enhancedparticipationinglobalvaluechains
Enhancedconnectivityandsectoralcooperation• Focusonstrategicsectoralpriorities
• Infrastructure
Aresilient,inclusive,people-orientedandpeople-centredcommunity• MSMEs• Povertyeradication
• Sub-regionalcooperation
GlobalASEAN• AdriverofregionaleconomicintegrationinEastAsia
• AunitedASEANwithanenhancedroleandvoiceinglobaleconomicforainaddressinginternationaleconomicissues
8
ASEANhasambitiousplansfortourismby2025
• TheGDPcontributionofASEANtourismcouldincreasefrom12%to15%• Tourism’sshareoftotalemploymentcouldincreasefrom3.7%to7%• PercapitaspendingbyinternationaltouristscouldincreasefromUS$877to US$1,500• Increasetheaveragelengthofstayofinternationaltouristarrivalsfrom 6.3 nightsto8 nights.
• Thenumberofaccommodationunitscouldincreasefrom0.51unitsper100headofpopulationinASEANto0.60unitsper100headofpopulation.
9
TourismprogressonIntegration
FDIrestrictionsreduced.SecondmostliberalizedsectorforFDIinASEAN(afterlogistics),althoughconstraintsinsomecountries(e.g.,Thailand)
Visaliberalization.Removalofvisarequirementsforshort-termtravelbyASEANcitizensinmostmemberstates.MovetowardsASEANsinglevisa
Introductionofopenskypolicies.Encouragedintroductionofnewcarriersinroutespreviouslydominatedbynationalincumbents
Vocationaltrainingprograms.Launchofnewtrainingprograms(e.g.,Singapore-MyanmarVocationalTrainingInstitute)
Visaissuesremain.ProgressonASEANBusinessTravelCardislimited.
Restrictionsondomesticairlinecompetition.Domesticroutesareonlyopentonationalcarriers.
Weaklabourmobility.Verylimitedprogressontourism-relatedlabourmobilityinASEANdespitebeinghavingmutualrecognitionagreements.
10
11
TheASEANSingleAviationMarketisaworkinprogress!
Whathasbeenachieved?ü Whathasbeenachieved?û
3rdfreedom
7thfreedom
Therighttoflyfromone’sowncountrytoanother
Therighttoflybetweentwoforeigncountrieswhilenotofferingflightstoone'sowncountry
4thfreedom
8thfreedom
Therighttoflyfromanothercountrytoone’sown
Therighttoflyinsideaforeigncountry,continuingtoone'sowncountry
5thfreedom
9thfreedom
Therighttoflybetweentwoforeigncountriesonaflightoriginatingorendinginone'sowncountry
Therighttoflyinsideaforeigncountrywithoutcontinuingtoone'sowncountry
12
ASEANcountriesstillimposevisarequirementsforshortbusinessvisits
Brunei Indonesia Singapore Thailand VietnamCambodia Laos Malaysia Myanmar PhilippinesASEANmemberstates
VisaonarrivalVisarequiredinadvance Novisarequired
Nationality
Japan
China
India
UK
US
Korea
Germany
France
Canada
Australia
13
ASEANisbuildingintegratedtripplanningfacilitiesandsupportingthedevelopmentofe-visas
• TheWesternAustraliawebsitehasspecificitinerarieslistedontheirwebsitewhichhelpstravelersplantheirtripbetter
• Theyalsohaveaneventssectionsthatliststhevariouspopulareventsandleadsyoutothelinktobookticketstotheevents
• Thewebsitealsohastheoptiontotranslateitintomultiplelanguages
WesternAustraliatourismwebsite Turkeytourismwebsite
• InformationtabontheTurkeytourismwebsiteprovidesinformationonthee-visaeligibilityandprocess
• Theapplicationfore-visaisintegratedintothewebsite• Itletsyouapplyforthevisa,makepaymentandthendownloadtheapprovedvisainstantaneously
• Alsohasoptionstotranslateintocommonlanguagesi.e.Spanish,Germanetc.
14
Fivemyths
Goodbyetoglobalization1
Growthwillcomefromtheregion’smegacities2
Whenitcomestotourism,it’sallaboutcapturingtheChineseconsumer3
TechnologydisruptionwillbethesameinAsiaaselsewhere4
Wewillreturnto“business-as-usual”afterafewshocks5
15
Nottheusualsuspects:middleweights,notmegaregions,aregrowingfastestinASEAN
Source: AlphaBetaregionaldatabase
CompoundannualgrowthrateofrealGDPShareofrealGDP2015
ShareofPop.2015#ofregions20152010-2015 2015-2020
5.0
5.0
5.1
4.2
4.8
5.7
MegaRegions5millionandabove
LargeMiddleweights1million– 5million
SmallMiddleweights500,000– 1million
Total
RuralRegionsBelow300,000
SmallRegions300,000– 500,000
6.9
5.8
5.5
6.0
5.5
6.0
32% 48%184
33% 11%8
16% 22%191
11% 10%448
8% 9%143
974
16
Don’tthinkaboutcountrieswhenitcomestogrowth–ThinkaboutcitiesGDPgrowth2010-2015CAGRPercent
1 Regionswith>500,000people.
3
5
5
6
6
6
8
9
9
11
145
8
6
15
108
10
12
23
ASEANaveragegrowth(5.5)
Thailand
Singapore
Malaysia
VietNam
Indonesia
Philippines
Brunei
LaoPDR
Cambodia
Myanmar
Fastestgrowingregion1Averagecountrygrowthrate Differenceingrowthrate;Percent
12
3
1
N/A
4
9
1
3
11
N/A
17
Whatisdrivingthegrowthofthemiddleweightregions?
Percentofuppermiddle– Weightregionswheregrowthdriverisoflargeormediumimportance1,Percent
1 Onlyincludesregionswithapopulationofmorethan1millioninhabitants
MediumLarge
30
12
12
18
10
42
30
22
14
14
34
Satelliteregion
Naturalresources
Tourism 32
24Growingconsumerbase
42
Trade&FDI 72
18
Examples
Mid-sizemiddle-weights Country
Growth rate(2009-13;percent)
Rich innaturalresources
Trade andFDI Tourism
Satelliteregion
Growingconsumerbase
Cebu4.4million
Karawang2.2million
Bandung3.4million
ChiangRai1.2million
Makassar1.4 million
Largefocus Mediumfocus
9.4
8.7
8.6
8.1
8.8
19
Fivemyths
Goodbyetoglobalization1
Growthwillcomefromtheregion’smegacities2
Whenitcomestotourism,it’sallaboutcapturingtheChineseconsumer3
TechnologydisruptionwillbethesameinAsiaaselsewhere4
Wewillreturnto“business-as-usual”afterafewshocks5
20
TourismisboominginASEAN,particularlyfromincreasingintra-ASEANvisitorsTouristarrivalsintoASEAN
4%4%4%
12%
30%
46% OtherAmericaOceaniaEuropeAsia(exASEAN)Intra-ASEAN
21
Manyplannedregionalinfrastructureprojectswillsupportthisgrowth
7
43
11
1
1
1
12
2
1 3
9
2
2
5
4
21
ThailandIndonesia
3
Malaysia
7
VietNam Brunei
2
Cambodia
2
Myanmar
2
Laos Total
1
39
2
Philippines
9
2
Road Rail Port EnergyAirportNumberofplannedPPPinfrastructureprojectsinASEAN
22
Fivemyths
Goodbyetoglobalization1
Growthwillcomefromtheregion’smegacities2
Whenitcomestotourism,it’sallaboutcapturingtheChineseconsumer3
TechnologydisruptionwillbethesameinAsiaaselsewhere4
Wewillreturnto“business-as-usual”afterafewshocks5
AnumberofuniqueaspectsinAsiawillinfluencetechnologydisruptionAsiacontext
Rapidlygrowingaffluentmiddleclass
Techlovingpopulation
Supplychainfragmentation
Skillsconstraints
Lowstartingpoint
• ASEANisthe2nd largestfacebookmarket
• AsidefromBruneiandSingapore,>50%ofallgrocerymarketsinASEANarestillconsideredtraditionalgroceryretailers.
• Only~20%ofpopulationabove25havecompletedsecondaryschooling
• <50%broadbandpenetrationinallcountriesexceptSingapore
• Consumingclasswilldouble inASEANby2030
• Bigdatatechniquestounderstandbuyingbehavior
• Socialmediastrategybecomescoretogrowth
• InternetofThingsallowstransformationofsupplychain
• Technologyempoweringworkersbyupskillingthem,orenablingthemtoachievesimilarimpactwithoutobtainingahighskill-level
• Lowwagecostsmaylimitdisplacement• Opportunityfordigitalleapfrogging
KeyfactsinASEAN Implicationsfortourism
23
TechnologywillcontinuetogiverisetoinnovativenewentrantsanddisruptincumbentsMusicindustryexample
NewtrendsemergeInnovativestartupscreatedisruptivebusinessmodels
Earlyadoptersstartembracingthenewmodels
Advancedincumbentsstartadaptingtothenewmodel
Mainstreamcustomersadopt
Laggardincumbentsdie
Advancedincumbents&established“start-ups”constitutethenewnormal
TimeDigitallynascent Emergingorontheadoptioncurve Newnormal
TippingpointIllegalupstart
provesdownloadpotential(1999)
Rentalandpurchasingmodels
Incumbentsfromproductionandretail
Traditionalretailers
24
5testsoftechnologicalreadiness
Doesyourcompanycultureallowyourteamtoundertakeboldtechnologyinitiatives?4
Doyouhavethepeopleinplacetodaytosupportwhereyouneedtogoto?Howdoyoumanagethetransitionforthosewhowillbedisplaced?5
Haveyoufullyintegrateddigitalinitiativesintoyourstrategicplanningprocess?2
3 Whichdisruptorsaresettochangeyourindustrylandscape?AretheyaNapsteroraSpotify?
1 Canyounamethreetofivetechnologiesthatposethebiggestrisksoropportunitiestoyourbusiness?Aretheydifferentthanoneyearorthreeyearsago?
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26
Fivemyths
Goodbyetoglobalization1
Growthwillcomefromtheregion’smegacities2
Whenitcomestotourism,it’sallaboutcapturingtheChineseconsumer3
TechnologydisruptionwillbethesameinAsiaaselsewhere4
Wewillreturnto“business-as-usual”afterafewshocks5
27
ExecutivesoperatinginAsiaconsidergeopoliticalinstabilitytobethebiggestpotentialrisktoglobaleconomicgrowthWhatriskstoeconomicgrowthwillbepresentintheglobaleconomyoverthenext12months?
5
11
11
10
22
30
33
34
38
68
Increasedeconomicvolatility
GeopoliticalInstability
Transitionsofpoliticalleadership
Domesticpoliticalconflicts
Newassetbubbles
Increasedvolatilityofexchangerates
Lackofaccesstocredit
Insufficientgovernment-policysupport
Lowconsumerdemand
Oneormoredefaultsonsovereignbond
8
12
19
15
21
20
22
36
37
68
4
4
13
12
26
16
28
35
39
77
8
11
16
17
29
19
18
31
25
82
9
10
16
21
13
18
19
33
35
75
China India Asia-Pacificcountries Europe NorthAmerica
28
Whataresomeoftheriskstogrowth?
Chinaeconomictransition
Description
• Transitionfrominvestmentledgrowthmodeltoconsumerledmodel
Impactontourism
• MostexposedmarketsincludeMalaysiaandKorea• Indonesialessexposed
SouthChinaSea• “Saber-rattling”fromChina • DropintourismarrivalsfrommainlandChina–
KoreaandTaiwanalreadyimpacted
Debt• Unwindingofhighconsumerdebtlevels
• MalaysiaandThailandhavesomeofhighestdebttodisposableincomelevelsglobally
• Myanmarwithriskstocapitalaccount
USDstrength• AppreciatingUSDplacingpressureoncurrenciespeggedtoUSD
• PotentialslowdowningrowthinHongKong.Korea,Taiwan,Thailand,andVietnamneedtobecareful
Demographics• Reductioninworkingagepopulation • Thailand/Singapore/Korea/Taiwanparticularly
impacted
29
Questionstoponder
Connectivity:WhatgrowthopportunitiesdoesASEANintegrationopenupforyou?Whataretherisks?
1
Intra-ASEANtourism:Howwillnewinfrastructuredevelopmentimpactyourinvestments?
3
Technologydisruption:Doyoumeetthe5tests?4
Newgrowthmarkets:Isyourresourceallocationinlinewiththeemerginggrowthpockets?
2
Globalvolatility:Howtobuildresilienceinyourmarkets(e.g.,lowercostofferings)?
5