SINGAPORE: The steady growth of Asean in the last five years is testimony that it is not affected by the flow of hot money in and out of the region.
With an estimated US$110bil a year needed for infrastructure development alone, the region remains an attractive destination for foreign investors, according to MALAYAN BANKING BHD (Maybank) group head of global banking Datuk Amirul Feisal Wan Zahir.
He said when it comes to sustainability of such money that was coming in, it all boiled down to fundamentals.
“Yes, it is true that hot money comes in and goes out, but as a region, if you look at the past five years or so, you’ll see that growth in Asean has been fairly consistent,” he said at a press conference held here in conjunction with Invest Asean Singapore here yesterday.
Economic growth may be slowing in some countries like Malaysia but in the Phillipines and Vietnam, it is moving upwards, so there is momentum on the whole (for further growth), Feisal said.
Foreign money looking for higher returns had been coming into emerging markets in recent times amid a low and negative interest rate environment in some developed markets, pushing local currencies higher in the process.
The ringgit, for instance, is at an eight-month high against the US dollar, trading at 3.87.
On another note, Feisal said Maybank with its expertise in project financing over the past five decades was well-positioned to support the infrastructure financing requirements in the region.
Citing estimates by the Asian Development Bank, he said the region needed some US$110bil per year until 2025 in infrastructure spend.
“Maybank’s latest research report entitled ‘Asean Infrastructure: The New Old Thing’ projects that the Government spend in Asean-6, which comprises Malaysia, Singapore, Indonesia, Vietnam, the Phillipines and Thailand, is set to be US$84bil this year,” Feisal said.
He said Maybank was linked to some US$15bil worth of infrastructure projects across the region in various capacities, including as adviser and financier.
Meanwhile, Maybank Investment Bank chief executive officer (CEO) John Chong, who was also at the event, said the overall outlook for investment banking (IB) was a bit more challenging this year compared with previous years.
“But for IB, it depends on the type of business. IB is not only equities, it’s also bonds, debts... for the Asean region, it is still positive for debt financing, as infrastructure projects still require capital raising,” Chong, who is also Maybank Kim Eng CEO, said.
Among the various sectors the firm is actively pursuing advisory and arrangement roles are power, renewable energy, waste, water and transport.
Chong said its equities side, which includes initial public offerings, is down so far this year on a year-on-year basis.
“But from an income fee perspective, our debt and merger and acquisition sides are not down but rather flattish. Still, on a net basis, the environment remains more challenging than before, but there are still opportunities.”
He said the second pillar of growth for Asean, which is strongly connected to infrastructure, is trade.
Humanitarian and music icon Bob Geldof gave the keynote address at yesterday’s event, which carried the theme “Asean’s Next Wave: Building the Infrastructure of Opportunity”.