The Association of Southeast Asian Nations (Asean), which celebrates its 50th anniversary this year, might get top marks for effort from Mark Mobius but he said it needs to gain more geopolitical and economic clout to unlock greater investment opportunities.
In a blog commemorating Asean’s ‘golden anniversary’, the Franklin Templeton emerging markets veteran said the region has come a long way since its tentative and difficult beginnings in 1967 and now represents the world’s seventh-largest market and third-largest labor force behind China and India.
However, it could become more powerful still, he said, if it could stop getting wrapped up in meetings and dialogue and actually take more decisive action.
Member countries also have differing political ideologies, ranging from communism to democracy, which some critics believe keep it from rising to be a stronger, more unified force.
While there are gaps in the wealth and development of its member countries, he believes they need to take the next step in their development.
‘Given all the challenges, I would give Asean an “A” grade for its efforts and the gradual introduction of various cooperation measures. Its members have been successful in cooperating to improve regional trade and investment, and also in tourism. Now, I think the next step is to move toward a common currency and common banking system.’
Another challenge is China’s opposition to a strong Asean bloc, he said, mainly due to the territorial disputes in the South China Sea.
The largest immediate risks to the Asean market, according to Mobius, remains a 'black-swan' type of event, which can not be predicted, as well as a slowdown in China that could have short-term implications for investor sentiment toward Asean countries.
‘Nonetheless, there has been a clear trend. For many years, the world’s engine of economic growth hasn’t been in developed markets, it’s been in emerging markets. And Southeast Asia is helping provide the power,' he said.
‘I think Asean can continue to see progress as these economies continue to grow, and we welcome the opportunity to unlock investment opportunities there. There are so many common areas of cooperation between the countries, there is no doubt to us that Asean will continue to develop and progress over the long term.’
The regional block was initially established with Thailand, Indonesia, Malaysia, Philippines and Singapore as founding members. Brunei Darussalam, Vietnam, Lao PDR, Myanmar and Cambodia later joined.