India is often talked about as one of the world’s rising economic powerhouses, due to its vast population, economic growth and strategic value to several countries as a trading partner. During its economic boom in the 2000s – when the country was tagged in the ‘BRIC’ grouping with Brazil, Russia and China – it became fashionable to talk of India’s demographic dividend and its ascent as south Asia’s powerhouse. Yet its GDP growth has markedly slowed from a high of 9% in 2010, to just 5% in 2012, according to the Asian Development Bank (ADB). With the growth in annual capital investment having slowed from 4.5% in 2012 to 3.5% in the first three months of 2013, it seems doubtful that the country will reach its growth target of 6.5% this year.


Although the government’s decision in early 2013 to allow foreign ownership of up to 51% of a company in the multi-brand retail sector will be significant in boosting FDI into India, commentators maintain the country has a long way to go before investors are entirely satisfied about its credentials, given the bottlenecks they encounter when doing business in India. Yet Anand Sharma, India’s minister of commerce and industry, is adamant that the government’s policy changes show that it is taking a proactive approach to reforming the country's business environment.

“Last year was one of the worst economic performances that we have seen [in India],” says Mr Sharma. “But we hope that we will be able to turn it around this year, despite the challenges that persist.” He is keen to stress that the government has ramped up its spending in infrastructure in order to further support India’s growth. “We [produced] the national manufacturing policy in October 2011, which aims to raise the share of manufacturing in our GDP from a low of 16% to at least 26% within a decade,” says Mr Sharma. “The Indian economy will also absorb $1000bn of investments in infrastructure – in projects such as highways and telecommunications [networks].”

Although India's rapid growth has cemented the country's position as south Asia’s foremost investment destination, Mr Sharma says that so far investment has primarily been attracted to a select few hubs, and on the whole India still has plenty of room for growth. In his view, Mumbai and Delhi are India’s key attractions for foreign businesses, while the country’s north-eastern cities are still under-penetrated. Thus, while rising labour costs in the country’s major cities may be a deterrent for investors looking to save money, investment opportunities remain robust in the country’s interior, where labour costs are significantly cheaper.

The opening up of Myanmar's economy could serve as a boon to the north-eastern part of India, which may become a key conduit of growth for companies based in India that wish to invest in both Myanmar as well as other Association of South-east Asian Nations (Asean) members. “We have a 1600 kilometre-long border with Myanmar and there will be enormous potential there as Myanmar is a big country,” says Mr Sharma. “This is a gateway for [companies in] India who want to get into the Asean region, and improving connectivity will unleash the trapped potential of north-east India as well as Myanmar.”

When asked whether the corrosive effects of corruption have played a part in preventing India from reaching its full potential, Mr Sharma says that not only has the government aggressively tackled institutional graft, but an excessive focus on disparate cases of corruption in India crowds out the larger narrative of India’s resilient development.

“There have been big collapses of banks and insurance companies [in the West], which led to the financial crisis, but how much accountability has there been?” asks Mr Sharma. “Those responsible for the corporate fraud in India are languishing in prison. They are not [working] as executives... We reject this kind of unfair criticism. India is an emerging power and we have accountability of institutions. While the rest of the developed world remains trapped in the crisis than unfolded in 2008 and 2009, we have rebounded very strongly. We will be able to turn things around even more this year.”


In Manila, the capital city of the Philippines, the going has never been so good. On weekday mornings, cars, motorcycles and jeepneys – the city’s public buses – compete for road space as they all stream into Makati, the city’s business district, loaded with passengers heading into one of Manila’s towering offices. International financial service providers such as JPMorgan Chase, Goldman Sachs and HSBC have all established operations in Manila to service the needs of its fast-growing industries, the most notable being the business process outsourcing (BPO) sector.

Having overtaken India to become the world’s leading BPO centre, the growth of this industry in the Philippines has elevated millions of Filipinos out of poverty and into its middle classes. This has led to the associated advantages of increased consumer spending and a rapid infrastructure build out, particularly in private property, to cater to a rising demand for housing. The Philippines is now one of the world’s fastest growing countries, achieving 7.8% GDP growth last year. For Ramon Jimenez, the Philippines’ secretary for tourism, as the country’s economy powers ahead, there has never been a better time for investors to step in to take advantage of the growth in its tourism industry.

“The Philippines is a country that is very much in the offing and, at the risk of jinxing it, we are not in a storm,” says Mr Jimenez. “In fact, we are in a very nice place, with 7.8% growth, which is the fastest in Asia.” Although international economic headwinds have affected its major trading partners, including the US, the Philippines has managed to stay on a relatively even keel. GDP growth has been upheld by a strong growth in household consumption, and the election in 2010 of president Benigno Aquino, who entered office promising to root out corruption in the country’s institutions, has further boosted investor confidence.

The Philippines government has successfully reduced its levels of public spending and Mr Jimenez maintains its improving macroeconomic fundamentals will make the tourism sector even more attractive for international tourism operators. “We have very solid fundamentals that are based on a fundamental change in the manner of our governance,” says Mr Jimenez. “This is founded on greater transparency – we have a more active and a much more open democracy, and the government has a very strong support from the people. The Ministry of Tourism has taken a reliable road towards growth – and we are very focused on sustaining the growth of tourists into our country.”

While the country’s IT-BPO industry will continue to be the mainstay of its economy in the near term (the industry increased its revenues by 22% last year), data from greenfield investment monitor fDi Markets shows the hotels and tourism sector has struggled to attract investors. Between 2003 and 2013, the hotels and tourism sector attracted only 17 projects out of a total of 939 greenfield projects that were recorded in the country during this period. A look at wider FDI trends reveals the picture is even worse for greenfield investments as a whole.

Although the Philippines attracted $359bn-worth of greenfield investments between 2003 and 2013, project numbers peaked in 2008 at 143 projects, and FDI has not recovered since. Only 45 projects were recorded in the first two quarters of this year, and Mr Jimenez concedes that its slowing FDI performance is a “weakness” that the government is working to tackle. Nonetheless, he remains confident over the future prospects for the Philippines. “Our growth is dynamic and we are really looking to gain the kind of momentum that makes what we have achieved so far irreversible,” he says.


Bangkok’s skyline attests to its strategic relevance for global retailers and consumer goods companies, who in recent years have been drawn to Thailand’s capital city because of its growing population of middle class and high-net-worth individuals. Furthermore, Thailand has developed a reputation as an international tourist destination; official estimates from Thailand’s department of tourism show that in 2011, the country attracted 20 million tourists, and it is predicted that between 2012 and 2022 it will have the world’s 14th fastest growing tourism industry.

Thailand is one of south-east Asia’s most globally integrated economies, and the country’s decades-long incentives-based policies have been praised for attracting FDI from international investors, as well as enabling the country to achieve middle-income status. Yet when flooding in Bangkok in late 2011 led the country’s economy to contract from a 7.8% growth in 2010 to a mere 0.1% in 2011, according to the World Bank, some investors became concerned about Thailand’s ability to manage its development. Yet Kittirat Na-Ranong, Thailand's deputy prime minister and minister of finance, says that although the floods dealt the government a significant blow, it also gave it a fresh impetus to develop flood prevention mechanisms, as well as examine other ways of improving critical infrastructure shortages in urban areas.

“During our first year in office in 2011, we suffered with the flood yet that was no excuse for us,” says Mr Na-Ranong. “We went ahead with the plan to improve our infrastructure, as well as improve the wages of those living in both urban and rural areas. By 2012 the economy [had achieved] 6% growth. So Thailand is in a transition period at the moment, and it is important that [the government] works very hard in areas related to government expenditure, in order to boost private investment.”

Yet Thailand’s outlook is far from certain. The country continues to suffer from a heavy reliance on its export industry, as well as a high exposure to the troubles of its trading partners in Europe and North America. Furthermore, a look at the country’s FDI performance reveals Thailand is still struggling to boost FDI to pre-2008 levels. fDi Markets data shows that after capital expenditure from foreign companies rose to a high of $15bn in 2008, greenfield investment steadily declined to $6.2bn in 2012 and $3bn so far this year.

Mr Na-Ranong concedes that although the government has increased its spending, there are still critical funding gaps with regards to the country's infrastructure. “If we really want to grow in future decades, we need to have [better] infrastructure,” says Mr Na-Ranong. “We have not really prepared ourselves for this. For example, our rail system represents only 2% of the total transportation system. We are very dependent on road transportation networks.”

Mr Na-Ranong is keen to stress that although investment from Thailand’s principal trading partners has been waning, future growth will be increasingly led by China, which will aid Thailand in its long-term ambitions to move into high value-added production. While Thailand’s principal trading partners are Japan and the US, which fDi Markets data shows invested 712 and 272 greenfield projects, respectively, between 2003 and 2013, Mr Na-Ranong maintains that China’s and Thailand’s economic policies will increasingly align to reflect deeper strategic ties between the two.

“The economic policies of China and Thailand seem to be the same, and we are working very hard to improve the productive efficiency of our workers,” says Mr Na-Ranong. “We will look into how we can work with China to make the different skills we have in Thailand move into higher levels of work. It is time for us to realise that the labour-intensive industry and low value-added [production] may not be right for Thailand. The country is in a transition period – we have been enjoying high export growth for 15 years, but the major buyers of those products in Thailand have become weaker. So it is a wake-up call for us to speed up the rebalancing of the economy.”