26 April 2023

Asia-MENAT corridor potential: Opportunities abound for both regions

The historic Middle East to Southeast Asia trade corridor was the focus of an international business roadshow earlier this year led by HSBC Group Regional CEO for the Middle East, North Africa and Turkiye (MENAT) Stephen Moss, and attended by all.

It’s an opportune time for those living and working in these regions, as they witness the growth of a trade corridor that dates back over one thousand years. Today, these are the world’s two most economically dynamic regions, with trade and investment opportunities abounding across multiple sectors.

Trade between the Middle East and Southeast Asia has resumed its upward trajectory since the pandemic, and the opportunities are highlighted in a recent report from HSBC, ASEAN-MENAT Corridor 2023: Tapping into Transformation, which focuses on five countries within each region: Malaysia, Indonesia, Singapore, Thailand and Vietnam (ASEAN-5); and Qatar, the UAE, Egypt, Saudi Arabia and Turkey (QUEST-5).

The report highlights that as of 2021, the two regions accounted for 7% of global GDP but were home to 15% of the global population, with relatively young demographics auguring well for rapid future growth. GCC-ASEAN trade rose 3.7% a year on average between 2010 and 2021, and although the pandemic caused a 27.8% drop in trade between the regions in 2020, it increased 30.5% from 2020 to 2021.

Photo of the Suez Canal, Egypt

International Trade Centre (ITC) projections for 2027 show an export potential of USD 53 billion between ASEAN-5 and QUEST-5 countries, with Vietnam and Thailand demonstrating the greatest potential, while the UAE and Turkey stand to benefit most from interconnected trade from Asia.

The two regions are also key players in the energy sector, with businesses capitalizing on GCC Governments’ energy diversification and decarbonisation policies that are opening up opportunities in renewable technologies.

An estimated 100 trillion US dollars will be invested globally to deliver net zero by the year 2050.

To get to net zero, more than half of the investments in power projects, almost half of the industrial investments, and 40-45% of investments in real estate, will be made in Asia and the Middle East.

The wider economic diversification agendas being pursued across the Middle East are some of the world’s most ambitious transformation programmes and have given rise to growth in the travel and tourism, real estate and construction, manufacturing, and telecommunications sectors.

Recent trans-corridor investment includes Egypt and Singapore, where the Egyptian Minister of Trade and Industry noted last December that Singaporean investments in Egypt, valued at a total $175 million, were distributed among 33 projects in the agriculture, manufacturing, services, information technology, and tourism sectors.

There is further work to be done, with greater formalisation of trade relations to plug existing gaps ongoing. It is hoped that the coming years will see new bilateral FTAs signed between ASEAN-5 and QUEST-5 countries. This will truly help supercharge this globally significant trade corridor, bringing with it huge prosperity dividends for the markets involved.