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Asian Cities To Fuel Economic Expansion, According to Economist Intelligence Unit Report Commissioned by InvestKL
LONDON, June 4, 2014 /PRNewswire/ -- In a series of six new reports released Monday to a select audience in London, The Economist Intelligence Unit (EIU) revealed dynamic growth across Asian industries, reinforcing the view that the balance of economic power is shifting eastward.
The EIU's "industry dynamism" barometer, commissioned by InvestKL (Greater Kuala Lumpur's investment promotion agency), measures the resilience and growth potential of six industry sectors across Asia: engineering services, environmental technology, food processing, healthcare, oil & gas, and wholesale & retail. Findings indicate that continued corporate investment in Asia will support longer-term opportunities, with Asia "standing out" as being the most exciting part of the world for growth and development.
Editor of the reports, Charles Ross, noted that "overall growth is strong across the region and that is reflected in the positive prospects observed for many industries." However, Mr. Ross cautioned that "rising labor costs and talent shortages will continue to challenge some companies."
Speaking at the launch of the reports, Zainal Amanshah, CEO of InvestKL said that the findings "reinforce the importance of Asian cities as drivers of the region's growth." Mr. Amanshah continued to note that "cities such as Greater Kuala Lumpur, with its ease of access to the rest of the region and business-friendly environment, are perfectly positioned to serve as corporations' Launchpad into Asia, especially when helped by federal initiatives targeted at driving growth in the six sectors."
Summary of findings:
"Remarkable rates of economic growth make Asia THE part of the world for engineering services firms, with this region accounting for 36.6% of global GDP in 2013, up from 26.8% in 2001," said Mr. Amanshah of the findings in this sector, which is also a key economic area identified by the Malaysian government.
"The huge wave of urbanization sweeping Asia requires a lot more investment in ensuring our urban environments and infrastructure are more efficient," Mr. Amanshah noted. "The opportunities for companies that can provide sustainable solutions limiting the environmental impact of our rising population are significant - to put them into context, this region already emits more carbon dioxide than the US, EU and Russian Federation combined."
"We already account for more than half of the world's population. By 2040, we will add another 800 million people to our count – all of whom are rapidly getting richer," said the CEO of InvestKL. "Asia's spending on food is forecast to double between 2007 and 2050 in real terms – representing three quarters of the global increase over the same period."
With populations and incomes rising, Mr. Amanshah noted that "health spending is growing even faster – Asia's share of world health spending is expected to rise from 21% in 2012 to 24% by 2017. Although parts of our region's population are still in need of basic healthcare services, more and more are beginning to require treatment for 'diseases of the affluent'."
Oil & Gas
"ExxonMobil expects a significant rise in Asia's share of global energy consumption, from 38% in 2010 to 45% by 2040," said Mr. Amanshah. "Meeting this rising demand for oil and gas in this region will be challenging, even though some countries are net energy exporters (such as Malaysia and Brunei)."
Wholesale and Retail
"The population of Asia is predicted to be 4.6 billion by 2040, with average consumer wealth rising in tandem," said Mr. Amanshah. "To put the impact of this population increase in perspective, in 2001 Asia accounted for 26.8% of global GDP measured using purchasing power parity – by 2013, our share had risen to 36.6%. Significant urbanization and penetration of modern retail formats are driving sales."
Further reinforcing the eastward shift of power is a study by McKinsey & Co quoted by the EIU in the reports, which notes that 420 cities in emerging markets (more than half of which are in Asia) are expected to contribute 45% of global GDP growth between 2010 and 2015. The report further notes that Southeast Asia will have many significant economic engines of its own, with urban population growth and productivity improvements rising faster than in rural areas, driving incomes up at a much faster pace. This combination of faster population growth and faster income growth led the EIU to conclude that it "makes cities the dynamos of the future".
The six papers, covering engineering services, environmental technology, food processing, healthcare, oil & gas, and wholesale & retail sectors, can be found here.
InvestKL is a Government entity under the purview of the Ministry of International Trade and Industry (MITI), Ministry of Federal Territories and PEMANDU, the Performance Management and Delivery Unit under the Prime Minister's Department. InvestKL works with other Government Ministries, entities and agencies to formulate attractive fiscal packages, and help corporations identify business opportunities while strengthening their competitiveness regionally and globally.
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