Asian foreign direct outflows to hit US$400b by 2020

Find out four challenges Singapore and neighbors must face to reach this record.

Ernst&Young revealed that the importance of Asia to global trade will continue to increase steadily over the next decade with foreign direct outflows reaching US$400b by 2020 for nine rapid-growth markets within East and Southeast Asia.

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The nine rapid-growth markets covered by the report are Singapore, Malaysia, Taiwan, South Korea, Thailand, Indonesia, Hong Kong, Vietnam and Mainland China. The impact of the foreign direct outflows trend will be momentous, creating new spheres of competition, a new generation of global companies, and changing patterns of trade flows both within and outside the region.

While Asian companies are on a high growth trajectory, they also face a host of dilemmas. The survey identified four key challenges:

1. moving up the value chain could erode the critical advantage of low cost;

2. the nuances of local markets are difficult to understand or control;

3. top management teams often lack an international outlook and

4. expanding internationally requires shoring up of infrastructure and capabilities.

This is according to a new Ernst & Young report, Beyond Asia: strategies to support the quest for growth, which surveyed over 600 business executives from organizations based in East and Southeast Asia.