INVESTMENT-SOUTH-EAST ASIA: Cash-rich Tiger Cubs Investing

• by IPS Correspondents (manila)
• Friday, December 23, 1994
• Inter Press Service

MANILA, Dic 23 (IPS) - Asia's emerging Tiger economies are normally thought of as mere recipients of foreign investment, but flush with new cash they are fast becoming investors themselves.

Malaysian, Indonesian and Thai investors are flocking to neighbouring lands and even Europe and North America -- catching up with Japan, South Korea, Hong Kong, Singapore and Taiwan.

Today, Thai firms are building dams and roads in Indochina, an Indonesian company will be constructing expressways in the Philippines, Malaysian firms are logging in the South Pacific and drilling for oil in Central Asia.

Vietnam is the hot new investment favourite where Hong Kong, Taiwan and South Korea are vying for the top slot, outpacing Western investors. A look further down the chart shows Singapore ranking sixth, Malaysia seventh with 559 million dollars in investments, while Thailand is 12th and Indonesia 14th.

Asia's transformation from a destination to a source of investments reflects not just the growth that has characterised the region in the last few decades, but that Asians are trading and investing more and more among themselves.

"Asians have a lot of investible surplus," says Shahid Zahid, an economist with the Manila-based Asian Development Bank (AsDB).

The increase in intra-regional investment goes hand in hand with rising trade between neighbours. The AsDB estimates that intra-Asian trade, including Japan, has grown from just 30 percent of total trade in 1986 to over 40 percent by 1993.

For most of the 1980s, intra-Asian investment was led by Japan, which invested heavily in the newly industrialising economies. Soon, the Tigers began investing in Malaysia, Indonesia, Thailand and more recently China. These countries owe much of their boom to the deluge of foreign cash.

"Lately this trend has widened to include new flows from countries which were only recipients in earlier years," observes AsDB assistant chief economist J. Malcolm Dowling. "For example countries in Southeast Asia are beginning to invest in Vietnam and China, and China is investing in Hong Kong and elsewhere."

For one, the new Asian investors are countries that have not only accumulated capital but are starting to lose the cheap labour that made foreign investments in manufacturing operations within their shores profitable.

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