Southeast Asia Gains Momentum as US-China Rivalry Shifts Supply Chains

Southeast Asia's Rising Role in Global Supply Chains

The rivalry between China and the US, the world's two largest economic powers, is bringing a massive wave of opportunities to Southeast Asian nations (ASEAN) in terms of fresh investment and trade diversification. William Fung, deputy chairman of Li & Fung, a Hong Kong-based pioneer in consumer goods supply chain, notes that geopolitical tensions are prompting manufacturers to diversify their supply chains to the region.

Investment Shifts and Economic Growth

• Southeast Asia attracted more foreign direct investment than China for the first time in a decade, with ASEAN's top economies bringing in US$206 billion in FDI in 2023.
• The China plus one strategy has become a vital approach for manufacturers seeking to mitigate risks associated with US-China tariffs.
• Vietnam is positioned as the favourite destination for Chinese companies looking to diversify, enjoying a surge in demand for industrial space.

The Future of Southeast Asia's Economy

The region's economy is projected to grow by 5.1% on average over the next decade, with industries like e-commerce driving growth. Li Fan from Warburg Pincus emphasizes that as institutional-grade real estate develops, significant investment opportunities will emerge.

Supporting the Supply Chain Boom

• United Overseas Bank (UOB) is preparing to support trade finance and bolster the entire supply chain value system.
• With over 4,500 companies supported in their overseas expansion, UOB is strategically positioned to connect businesses in ASEAN to Greater China and beyond.

As demand continues to grow and supply chains evolve, Southeast Asia stands poised for significant growth, making it a key focus for investors.