Overview Profile & Statistics Asian Economic Development Travel, Tourism & Leisure Industries

Sep 2, 2018

From the Land of the Midnight Sun to the Beautiful Beaches of South East Asia, Svendheim Builds a Hospitality Empire, Celebrating their 9th Anniversary.

Introduction: the Asian Economic “Miracle”

It’s no secret that the economies of Asia are achieving some of the largest economic growth rates in the world. China, of course, is the leading economy in the region, and has, over the past 

30-years, gone from an impoverished, backwards economy, to the second largest in the world. They have achieved annual growth rates averaging 7.1% from 2012 to 2017. As a result, they have catapulted an astonishing 300 million of their citizens into prosperity. South Korea too is prospering to a degree a few short decades ago many couldn’t imagine. They have joined the Japanese as being one of Asia’s most dynamic economies.

Other Asian countries, once commonly referred to as “Asian Tigers”, are also seeing robust economic gains. They too are helping many former poor subsistence farmers move into the middle class. 

Despite the U.S. economy being the world’s largest economy, the International Monetary Fund (IMF) stated that it would be Asia, not America that will be “the most important engine for global growth,” both next year and beyond. In a report recently issued by the IMF, they noted that, even with the prospect of regional trade disputes, Asia’s economies are projected to grow over 5% in 2018 and 2019.

And it’s not just the IMF that is bullish on Asia. According to the Paris-based Organization for Economic Cooperation and Development (OESD), barring any major crisis, the Asia-Pacific region will be the leading economic powerhouse through 2030.

Travel and Tourism in Asia

According to Colliers, a leading hospitality consulting firm, tourist arrivals in the Asia Pacific area are growing rapidly. In 2017, 321 million foreign arrivals came to the region. That’s expected to increase by 4.5% in 2018. 

Tourism is a major job creator in Southeast Asia. According to the World Travel and Tourism Council, the travel and tourism sector has outperformed overall economic growth globally, contributing $7.6 trillion to the global GDP in 2016 alone. Furthermore, a recent Bloomberg report stated pointedly, “Asia is the epicenter of a boom that is changing how we travel”.

The Chinese currently account for a fifth of the money spent by outward bound tourists. That’s a twice as much as the next largest spender, the U.S., said a UN organization. The Chinese government issues an amazing 10 million travel documents a year to their citizens. It’s estimated that Chinese tourists will spend over $429 billion abroad by 2021, according to a report by CLSA, a leading Asian financial services company. 

Globally, tourism accounts for 10% of the world’s jobs. In Cambodia, 26% of all employment is associated with the tourism industry. Over 5.8 million jobs in Thailand are tied to the tourism industry. It contributes 15.5% of the country’s GDP, higher than the county’s second and third largest export items, according to Thailand government statistics.  

The World Travel and Tourism Council’s “2018 Annual Economic Report” stated that globally, one in five new jobs created over the last ten years were in tourism, noting that jobs tied to tourism, “… was particularly strong across Asia…” The report also stated that future job growth in Asia will be tied closely to tourism. 

Hotel and Condo Development

Hotel and condo construction is expanding in the Asian Pacific region, trying to keep pace with demand. According to the trade publication Hotel Managment, China, not surprisingly, leads the region with 745 hotels projects in the development pipeline as of 2017. That’s followed by Thailand at 91, Indonesia with 116, Malaysia with 79 and the Philippines with 38 projects currently underway. 

Foreign Investment into the Region

Due to their robust economic growth and favorable government policies which encourage foreign direct investment (FDI), funds from overseas have been pouring into the region. According to a United Nations summary, over $476 billion in FDI has come into Asia, making it the leading recipient among all regions of the world. ASEAN saw an 11% increase in FDI to $134 billion. Thailand received over $8 billion in FDI in 2016 vs. $3 billion in 2015 according to the financial services company Santander,Cambodia received $1.92 billion. In 2017, Indonesia was the recipient of $32.34 billion in FDI, and the Philippines received $8.7 billion during the first 11 months of 2017.

A Country by Country Profile

Thailand

Thailand is one of Asia’s safest and most sought after investment destinations due, in part, to its growing economy. The World Banksaid, “Thailand is one of the great development success stories… becoming an upper middle income economy.” This year, the economy is estimated to grow at over 4%, much of this driven by tourism. 

According to a study by one of the country’s leading banks, Thailand ranks second from the top, in terms of financial health, in their often sited emerging market “Vulnerability Index” which tracks 24 emerging market economies. The index looks at a country’s current balance of payments, foreign reserves, external debt and domestic inflation.

In a similar study by Bloomberg Economics analysis, in respect to recent currency contagion fears, Thailand ranks as the second-least vulnerable of 19 emerging market economies. On August 15, 2018 Bloomberg noted, “Thailand is proving more resilient, aided by flush foreign reserves, baht (Thailand’s currency)stability and benign inflation amid steady growth.

Indonesia

Indonesia has seen robust economic growth over the past several years. The economy grew by 5.1% in 2017, and 5% in 2016. This trend is continuing in 2018. Inflation in the country is low. Sound government economic policies have resulted in four credit rating upgrades over the past 12 months, according to the World Bank’s Indonesian Quarterly Economic Review in June, 2018.

As in the rest of Asia, tourism plays a large role in the Indonesian economy. They rank second, behind China, in having the most hotel development projects currently underway. Government programs help promote tourism. They saw over 12 million visitors in 2016. The country’s rich culture, diverse eco-systems and an archipelago consisting of over 1,500 islands, makes Indonesia a tourist’s paradise.

Cambodia

Cambodia has experienced strong economic growth over the past two decades. From 2000 through 2010, the economy rose by an average of 8% per year, and by an average of 7% since 2011. The World Bank recently formally reclassified Cambodia from a Low Income developing country to a Lower-Middle Income country, reflecting their great economic strides. 

Tourism plays a critical role in Cambodia’s economic well-being. Over 26% of all employment in the country is tied to tourism. In 2017, over 5 million tourists visited the country. Cambodia is an enchanting tourist destination with miles of unspoiled beaches, exotic cuisine and the ancient temples of Angkor. These attractions will bring a greater number of foreign visitors to Cambodia over the next several years.

Philippines

The economy of the Philippines has grown, on average, by 6% every year from 2011 through 2017. That year, they set a record for FDI inflows.The country receives vast sums from overseas remittances by the 10 million Philippine nationals who work abroad. Unemployment is declining so fewer people are moving overseas. 

Tourism contributes over 10% to the county’s annual GDP, and employs over 3.8 million people. Because of its rich bio-diversity, beautiful beaches, rain forests and historic connection to the U.S., the Philippines is an attractive destination for tourists from the West and Asia. 

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tommy@new-nordic.com
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