The Economist Intelligence Unit (EIU) has revealed dynamic growth across Asia in a series of 6 new reports.
The EIU’s ‘industry dynamism’ barometer measures the resilience and growth potential of six industry sectors across Asia: engineering services, environmental technology, food processing, healthcare, oil and gas, and wholesale and retail.
Editor of the reports, Charles Ross, commented on their findings: “Overall growth is strong across the region and that is reflected in the positive prospects observed for many industries”. However, “rising labour costs and talent shortages will continue to challenge some companies”.
Zainal Amanshah, CEO of InvestKL, said that the findings “reinforce the importance of Asian cities as drivers of the region’s growth”. Amanshah continued on to say that “cities such as Kuala Lumpur, with its ease of access to the rest of the region and the business friendly environment, are perfectly positioned to serve as corporations’ launchpad into Asia, especially when helped by federal initiatives targeted at driving growth in the six sectors”.
Summary of key findings in the engineering, economic and oil and gas sectors are featured below:
- Rapid economic growth translates into a wide range of engineering opportunities (between US$ 8 trillion and US$ 9 trillion of new infrastructure needed between 2010 – 2020).
- Asia’s engineering companies are growing rapidly as they capitalize on these opportunities (between 2005 and 2011, the approximately 120 engineering companies listed on the region’s stock exchanges grew top line revenues by an average of 20%/y).
- Asia is becoming a major centre of research and development activity. R&D spending in Asia was up from 27.2% of global spending in 2002 to 33% in 2009, ore than North America or Europe).
Amanshah said: “Remarkable rates of economic growth make Asia THE part of the world for engineering services firms, with this region accounting for 36.6% of global GDP in 2013, up from 26.8% in 2001”.
- Policy support for renewable energy in Europe has fallen away, but is strong in Asia.
- Asia is experiencing record levels of cleantech investment – across the 6 years of this study, value of fixed assets per company increased by an average of 9%/y.
- The combined revenues of Asia’s cleantech firms has more than doubled over the period of study (with a growth rate of approximately 13%/y from 2005 to 2011).
- While overall growth is strong, rising labour costs have constricted profit margins.
Amanshah commented: “The huge wave of urbanization sweeping Asia requires a lot more investment in ensuring our urban environments and infrastructure are more efficient. The opportunities for companies that can provide sustainable solutions limiting the environmental impact of our rising population are significant, to put them into context, the region already emits more carbon dioxide than the US, EU an the Russian Federation combined”.
Oil and gas
- Growth in demand for gas will outstrip other fuels, given its cleaner environmental characteristics and superior flexibility.
- Most countries import more than they produce. BP has calculated that Asia produced 8.3 million bpd in 2012 (9.6% of global production), but consumed 29.8 million bpd (33.5% of global consumption).
- The Asia Pacific region holds substantial potential for upstream development. The biggest opportunities exist in new gas fields, such as in Myanmar and Papua New Guinea.
- In order to extract gas from Asia’s more complicated fields, regional oil and gas companies are investing more heavily in new technologies (in 2011, Asia’s 50 listed oil and gas firms spent US$ 2.13 billion in R&D, up from US$ 368 million in 2004).
- The region’s listed oil and gas companies are reporting strong revenue growth. In 2004, revenue per company in the sector stood at US$ 2.9 billion. By 2011 this figure had grown to US$ 10.2 billion, at an annual average growth rate of 20%.
- While growth is rapid, the industry also faces significant challenges in the form of rising competition, rising costs, and shortages of talent. Reflecting these issues, the return on capital employed for Asia’s listed oil and gas sector fell from 19% in 2004 to 8.3% in 2011.
Amanshah said: “ExxonMobil expects a significant rise in Asia’s share of global energy consumption, from 36% in 2010 to 45% by 2040. Meeting this rising demand for oil and gas in this region will be challenging, even though some countries are net energy exporters (such as Malaysia and Brunei).”
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/04062014/significant_growth_opportunities_in_asia_654/