Indochina moving toward Tiger status

By Bryan Livingston
Executive Vice President and Principal

A recent trip to Indochina for a meeting of M&A International certainly opened my eyes to the tremendous opportunity the region holds. Although the countries of Indochina — Thailand, Vietnam, Myanmar (formerly Burma), Cambodia and Laos – have a long way to go to qualify as ‘Asian Tigers,’ the region might be a lot closer than we realize. In fact, it’s easy to imagine a time not too many years away when the gross domestic product (GDP) of several of these countries starts to approach that of Taiwan, Hong Kong or Singapore.

Indochina simply has a lot going for it. In fact, I expect that it won’t be long before many of the aggressive companies in the region will start looking for larger firms to ally themselves with so they can sustain their growth.

Looking at the region as a whole, the GDP of Indochina is just a step behind  Saudi Arabia ($745B vs. $655B) and a step ahead of Sweden ($576B). And while the International Monetary Fund (IMF) expects the global economy to plug along at a 4.1 percent growth rate through 2017, the projected growth rates for some of the countries in Indochina is much greater. For instance, the economy in Cambodia is expected to grow 7.2, in Laos by 7.8 and in Myanmar by 6.7 percent. Additionally, exports are already booming. During 2012 Vietnam’s exports grew 87, Thailand’s 77 and Cambodia’s 54 percent.

On their own, those numbers will grab your attention, but it’s when you start scratching below the surface that you uncover what’s behind the growth. And that’s when you begin to realize that Indochina holds tremendous potential.

For example, manufacturing will be attracted to Indochina’s monthly labor costs, surprisingly less than half those of China across much of the region. The textile industry has already taken notice with automotive, electronics and electrical equipment not far behind. Another important data point is the relative youthfulness of the work force. Some 53 percent of the population of Indochina is younger than 30 years of age, a demographic advantage that will help Indochina countries to outcompete many aging global players

Indochina has an abundance of energy, minerals and land devoted to agricultural production, not to mention productive fisheries and aquaculture. Fossil fuels are readily available and the region’s capacity for hydroelectricity could explode by 2020. The minerals that are already being mined include gold, silver, copper, tungsten, tin and zinc.

All in all I’d say that Indochina will command a lot attention in the years ahead.