Bangkok, a city once known for low cost manufacturing, now attracts asset managers

When I visited Thailand in 1986 on a student holiday, my guidebook noted that Bangkok was a city of 5 million people. When I went back there with my wife in 2003, my new shiny book stated that Bangkok was home to 10 million people. The population had doubled in 17 years. And it was a big city to start with!

This phenomenon is not unique in Asia. There are many examples of villages becoming towns, towns transforming into cities and large cities becoming even more substantial. Bangkok certainly felt a lot bigger, brasher and more westernised in 2003, and had inevitably lost some of its smaller-sized charm.

Southeast Asia, as always, offers the visitor cultural richness, startling beauty, exotic foods, bustle and heat.  But today’s visitor to the region will also be struck by the level of urban development, growing signs of wealth evident in houses, cars, smartphones and the intense pace of life in its cities. The region offers socioeconomic promise, making it increasingly attractive to the foreign investor. 


Shifting through the gears

One thing is clear about the global economy and its future – its growth engine is perceptibly moving eastwards. In a recent study the consultancy firm McKinsey claims that Asia will account for 50% of global GDP by 2040. Moreover, it will account for 40% of global consumption. China has enjoyed much of the attention in this respect over the past 20-odd years. But China’s economy is maturing, as its focus transfers from investment to consumption. If China has provided the shift through the gears over the past decade or two, then further acceleration will come from South East Asia.

Emerging economies

Riding on the coattails of China’s epic expansion, Asia has enjoyed persistent and robust growth. Previously perceived as exotic backpacker destinations, promoted and made accessible by publications such as the ubiquitous ‘Lonely Planet Guide’, the likes of Vietnam, Cambodia and Laos have moved on. Today, they are increasingly vibrant and dynamic, and safer places to do business.

Vietnam has only recently swapped its status as a relatively poor, agrarian nation to become a low-cost manufacturing hub. Further down the chain are countries, such as Laos and Cambodia, which have, until very recently, been barely touched by the dramatic evolution evident elsewhere on their doorsteps.

Should we expect these latter countries to embark upon the journey already taken by their more prosperous and more stable neighbours? North Korea aside, it seems that all Asian countries are open to and can benefit from this process. Until recently, China was the workshop of the world. This mantra is slowly ebbing towards Vietnam and others, especially in the wake of the US-China trade dispute. 

Rags to riches

Vietnam is experiencing that inevitable modernisation and a greater standard of living that all previous ‘pretenders’ experienced. As seen in Thailand and Indonesia, the pattern is clear. Rising incomes lead to higher discretionary spending and with it, better standards of living, increasing leisure activities, improved health and, ultimately, life expectancy. The country boasts that crucial ingredient of a young and increasingly well-educated workforce. Half of the population is less than 35 years old. Moreover, they are clamouring to learn English, which they see as a communication passport to the wider world.

Vietnam is most certainly garnering inward investment. The country is now a major producer of mobile phones. Statistics show that it took 17% of all venture capital investment in South East Asia in the first half of 2019. The comparable figure in 2018 was 5%.

Cambodia is another country enjoying stellar growth rates. The country grew by 7% in 2019. Inward investment has climbed, construction projects are proliferating and exports (of clothing, shoes and accessories) are soaring. Tourism is also booming as the country’s dark past becomes more distant. Poverty – measured at approximately an income of $1 per day – fell from almost 50% in 2007 to 13% in 2014. 




Cambodia is one of the countries with a rapid growth in exports
Savings searching for a home

But it is not just a manufacturing renaissance. As these countries have developed, higher incomes have led to savings which are finding their way not only into bank vaults but also stock markets. Take Vietnam: the growth and emergence of the Vietnamese stock market (with a market cap of well over $150 billion) has been incredible. It is up nearly fourfold since the nadir of the Global Financial Crisis.

Moreover, it is getting close to being included by MSCI in its emerging market index. This means greater visibility and coverage of the market by analysts and investors, in turn leading to more local, and especially, foreign investment. The larger asset managers and brokers now have an on-the-ground presence there. A few months ago, the Aberdeen Standard Asian Focus Trust announced their first investments in the Vietnam stock market.

This is a pattern that has been seen before in places like Thailand. From humble beginnings, these markets and interest in them can take off quickly. It can lead to a veritable thickening of the canopy around the nascent market, as investment professionals move in.


Deregulation and less red tape have created easier access to those countries who recognise the transformative nature of inward investment. Vietnam, Cambodia and Laos have made great strides, embracing the economic opportunities afforded by the scaling back of barriers.

A bright future

Looking ahead, it will likely be the growth in services that will drive Asian growth. This is currently happening in China, with higher discretionary outlay on luxury items and, importantly, education.

The outdated view of Asia as a mostly agrarian region is being consigned to history. The population of Phnom Penh, for example, is currently around 1.5 million. What price 3 million in 15 years’ time?

Mike McNaught-Davis