Jakarta. Southeast Asia could enjoy stronger economic growth if countries in the region focused on three areas that would increase productivity and competitiveness, consulting firm McKinsey Global Institute said in a report.
The Association of Southeast Asian Nations — comprised of member states Indonesia, Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — have emerged as one of the world’s most dynamic growth markets, the report said.
As a single entity, the region ranked as the seventh-largest economy in the world. With a combined gross domestic product of over $2.4 trillion, its economy was more than 25 percent larger than India’s in 2013.
The report, “Southeast Asia at the Crossroads: Three Paths for Prosperity,” suggested that greater regional integration, urbanization and new technologies and innovation were key to accelerating productivity and creating broad-based prosperity.
“In all three of these areas, long-term thinking and investment by the public and private sectors could create economic opportunities worth hundreds of billions of dollars and place the region on a faster and more sustainable trajectory through 2030,” Oliver Tonby, managing partner of McKinsey & Company, said in a statement sent to the Jakarta Globe on Monday.
According to the report, greater integration could improve cost competitiveness for companies by up to 20 percent in many sectors by creating regional economies of scale and improved inventory and logistics management. The report recommended member states fully implement the Asean Economic Community (AEC) integration plan.
Some 81 million households in Southeast Asia are part of the “consuming class,” the report said. When combined with the forces of urbanization, that number may double to 163 million households by 2030.
Urban growth may demand more than $7 trillion of investment in core infrastructure, housing and commercial real estate across the region through 2030.
The report added that technology and innovation are also growth factors in the region, which it said is becoming more tech savvy.
McKinsey Global Institute is the research arm of consulting firm McKinsey & Company, which charges top dollar for what it describes as “unparalleled management insights” and “deeper understanding of the evolution of the global economy.”