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German firms ready to invest in SE Asia
An increased number of German companies aim to invest in Southeast Asia to tap into enormous potential from the upcoming single market and Indonesia will be among the top destinations, a survey shows
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n increased number of German companies aim to invest in Southeast Asia to tap into enormous potential from the upcoming single market and Indonesia will be among the top destinations, a survey shows.
Out of 135 German companies surveyed, mostly small and medium enterprises, 75 percent said they planned to begin or expand investment in the region, driven primarily by high expectations for an improved business climate with the establishment of the ASEAN Economic Community (AEC) at the end of this year, according to a flagship report by German chambers of commerce and industry in ASEAN and global advisory firm Ernst &
Young (EY).
AEC would increase the attractiveness of the region as a production hub and simplify trade, said Thomas Wirtz, who heads the EY German Business Center in Indonesia.
'While small and medium enterprises have been lagging behind when it comes to investment in ASEAN, including Indonesia, this is likely to change as 41 percent of the respondents expect the market to be more important than BRICS [Brazil, Russia, India, China and South Africa] as well as other regions,' he said Thursday during the release of the report titled ASEAN 2015 and beyond: Are German investors
missing out?.
In Indonesia, which represents 40 percent of the region's gross domestic product (GDP) and population, small and medium German companies were seeking to do business in a wide range of areas, including e-commerce, retail, automotive parts, pharmaceutical and medical equipment, Wirtz added.
The report ranks Indonesia fifth among top destinations for German investment after Myanmar, Vietnam, Cambodia and Laos, where business projects from the world's fourth-largest economy are still relatively low, thereby presenting wider room for growth.
Currently, only 1.9 percent of German foreign direct investment (FDI) totaling 18 billion is channeled into the 10-member grouping despite its tremendous potential with the 620 million people in ASEAN.
The diversity of ASEAN is a key obstacle for new companies to do business for the first time in the region, while political stability, an uncertain regulatory environment and the risk of corruption appear to be major sources of concern for the German business community.
German Ambassador to Indonesia, ASEAN and Timor Leste Georg Witschel underlined the need for some changes in Indonesia to enhance its business
