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ASEAN: Market Profile

Major Economic Indicators

Table: Major Economic Indicators (ASEAN)
Table: Major Economic Indicators (ASEAN)

Latest Development

  • Real GDP of the 10-nation ASEAN[1] grew by 5.1% in 2018, helped by robust domestic demand. The Asian Development Bank (ADB) expects the GDP growth of the trade bloc to moderate to 4.8% in 2019.
  • The ASEAN Economic Community (AEC) was officially launched on 31 December 2015 to create a single market to enable an easier movement of goods, services, investment, capital and people across the region.
  • ASEAN and Hong Kong signed a Free Trade Agreement and a related Investment Agreement in November 2017. The agreements with Laos, Myanmar, Singapore, Thailand, Vietnam and Malaysia have entered into force.
  • In the first nine months of 2019, Hong Kong’s total exports to ASEAN increased by 2.6% YOY to US$29.6 billion, while imports from the trade bloc totaled US$65.7 billion in the same period, representing a 9.9% YOY decrease.

Current Economic Situation

ASEAN is a fast-expanding trade bloc in Asia with a growing economic clout. With a combined population of over 649 million, ASEAN’s aggregate economic size surpassing US$2.9 trillion in 2018.

Marking a major milestone in the regional economic integration agenda, the ASEAN Economic Community (AEC) was officially launched on 31 December 2015 to create a single market to enable an easier movement of goods, services, investment, capital and people across the region. The formal establishment of the AEC does not point to an end of the efforts in achieving further integration among the AEC countries, be it economic, political and socio-cultural. The AEC Blueprint 2025 was adopted by ASEAN leaders in November 2015, providing the broad directions through strategic measures in five areas for the AEC from 2016 to 2025.

If treated as a single entity, the AEC would be ranked as the third largest economy in Asia and the fifth largest in the world (after the US, China, Japan and Germany based on 2017 figures). Yet, the AEC is diverse in terms of income level. While the bloc has an average per capita income of around US$4,600, that of individual members ranges from a low of around US$1,400 in Myanmar to more than US$60,000 in Singapore.

The ASEAN economy as a whole expanded by 5.1% in 2018 and the growth is expected to moderate to 4.8% in 2019, mainly due to the slowdown in investment and export growth in some member states.

In 2018, inward FDI flow to ASEAN rose by 5.3% to US$155 billion from US$145 billion in 2017. Performances of ASEAN member states differed, with Thailand, Vietnam and Cambodia showing a strong increase, while Malaysia and Myanmar witnessing a decline in 2018.

Despite the sluggishness of the developed markets over the past few years, ASEAN economies have generally remained buoyant, thanks in part to the bloc’s expanding intra-Asia trade. While the bulk of intra-Asia trade comprises parts, components, raw materials and machinery needed in export-oriented production, consumer goods are increasingly traded within Asia. As noted by the IMF, the increasing role of intra-Asia trade in final consumption goods, along with a large domestic market, appears to provide the region with a potential source of resilience against global demand shocks.

An expanding middle class in ASEAN, estimated to be over one-quarter of the ASEAN population, has been fuelling consumer spending and retail sales in the organised channels. Within ASEAN, Indonesia is estimated to have the biggest number of middle-class people, while Vietnam has recently shown the fastest growth in the middle-class people, despite a much smaller population size.

Total exports from the ASEAN economies rose by 8.2% to US$1,432 billion in 2018. ASEAN itself is actually the largest market for exports from the trade bloc, accounting for 24.1% of total ASEAN exports in 2018, followed by Mainland China (13.9%), the EU (11.2%), the US (11.2%), Japan (7.9%) and Hong Kong (7.0%).

Table: Major Export Items (2018)
Table: Major Export Items (2018)

In terms of imports into ASEAN, the largest supplier was ASEAN itself with a share of 21.8% in 2018, followed by Mainland China (20.5%), the EU (9.2%), Japan (8.4%), the US (7.4%), South Korea (7.3%), Taiwan (5.6%) and Malaysia (5.5%).

Table: Major Import Items (2018)
Table: Major Import Items (2018)

Trade Policy

In the 1990s, ASEAN countries established the ASEAN Free Trade Area (AFTA) with a view to raising the bloc’s competitive edge as a production base through the reduction or elimination of tariffs and non-tariff barriers on intra-ASEAN trade, in addition to attracting FDI. AFTA adopted a scheme of Common Effective Preferential Tariff (CEPT) among ASEAN members for tariff reduction to between zero and 5% by 2010. The ASEAN Secretariat was given the authority to monitor and ensure compliance with AFTA measures. Despite the AFTA-CEPT, there is no common external tariff on goods imported from outside the trade bloc, with each ASEAN member applying import tariffs based on its national schedules.

On the heels of AFTA and as part of ASEAN’s Vision 2020, ASEAN has embarked on a more ambitious strategy of regional economic integration to launch the AEC on 31 December 2015. The AEC objectives are fourfold, intending to achieve (i) a single market and production base, (ii) a highly competitive economic region, (iii) a region of equitable economic development, and (iv) a region fully integrated into the global economy. The AEC is expected to enable an easier movement of goods, services, investment, capital and people across the region.

Under the AEC framework, the more developed ASEAN members, namely, Singapore, Thailand, Indonesia, Brunei, Malaysia and the Philippines, had basically achieved zero tariffs as of the end of 2015, with the remaining four, namely Cambodia, Laos, Myanmar and Vietnam (ASEAN-CLMV), given more flexibility in lowering import duties until 2018. As of the end of 2018, about 97.7% of import duties have been eliminated for CLMV countries.

In addition to FTAs individually secured by ASEAN members, ASEAN as a trade bloc has adopted a pro-active stance towards extra-bloc free trade and regional economic integration, having concluded a number of FTAs and economic partnership arrangements including the China-ASEAN Free Trade Area (CAFTA), ASEAN–India FTA, ASEAN–Japan Comprehensive Economic Partnership (AJCEP) and ASEAN–Korea FTA. Besides, ASEAN is engaged in negotiations on Regional Comprehensive Economic Partnership (RCEP), a proposed FTA with six countries with which ASEAN has existing FTAs, namely, Australia, China, India, Japan, Korea and New Zealand. RCEP countries, which account for about 30% of the world’s GDP and over a quarter of global exports.

In November 2017, ASEAN and Hong Kong signed an FTA and a related Investment Agreement. The agreements, cover six areas, namely trade in goods; trade in services; investment; economic and technical co-operation (ECOTECH); intellectual property rights; and dispute settlement. The agreements with Laos, Myanmar, Singapore, Thailand and Vietnam entered into force in June 2019, while the agreements with Malaysia became effective in 13 October 2019.

Hong Kong’s Trade with ASEAN

As a trade bloc, ASEAN is Hong Kong’s second largest trading partner after Mainland China and the fourth largest export market of Hong Kong after Mainland China, the EU and the US.

In the first nine months of 2019, Hong Kong’s total exports to ASEAN increased by 2.6% YOY to US$29.6 billion. Major items exported to ASEAN in the period included telecoms equipment and parts (22.3% share of the total exports), semi-conductors, electronic valves and tubes (14.5%), electrical apparatus for electrical circuits (4.8%), parts and accessories of office machines/computers (4.5%), and office machines (3.4%).

Hong Kong’s imports from ASEAN totaled US$65.7 billion in the first nine months of 2019, showing a 9.9% YOY decrease compared with same period last year. Major import items were semi-conductors, electronic valves and tubes (59.8% share of the total imports), telecom equipment and parts (6.1%), computers (4.0%), petroleum oils (4.0%), and parts and accessories of office machines/computers (3.1%).

Mainland China has been ASEAN's largest trading partner since 2009. Trade between the huge markets of Mainland China and ASEAN will likely continue apace and this should bode well for Hong Kong in its handling of re-export trade for both places. In the first nine months of 2019, US$28.8 billion or 97.4% of Hong Kong’s exports to ASEAN were re-export items, of which 70.2% were originated from the mainland, followed by Taiwan (3.6% share) and US (3.5% share). In the first nine months of 2019, Vietnam was the top export market of Hong Kong in ASEAN, followed by Singapore, Thailand and the Philippines.

Table: Hong Kong’s Trade with ASEAN
Table: Hong Kong’s Trade with ASEAN
Table: Hong Kong’s Exports to ASEAN
Table: Hong Kong’s Exports to ASEAN

ASEAN’s Involvement in Hong Kong Economy

According to the Hong Kong Census and Statistics Department, there were 628 ASEAN companies in Hong Kong as of June 2019, including 62 regional headquarters, 143 regional offices and 423 local offices. They accounted for about 6.9% of the total number of foreign companies in Hong Kong.

Singapore’s cumulative FDI in Hong Kong totaled HK$383 billion as of end-2017, accounting for 2.5% of the total cumulative FDI and ranked 6th among all FDI sources.

A total of 2.1 million tourists from the six ASEAN countries of Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam visited Hong Kong in the first nine months of 2019, dropping by 0.6% from the same period last year.


[1] ASEAN consists of 10 members, namely, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Content provided by Picture: Jacqueline Yuen
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