Skip to content Skip to Search
Skip navigation
  • Analysis

Southeast Asian investors flocking to Gulf to deploy capital

Factory, Building, Architecture Unsplash/ThisisEngineering
The GCC's technology sector has seen increasing Asian investment, as well as construction and renewables
  • Asian bloc to be GCC’s biggest trading partner by 2030
  • Bilateral trade to reach $578 billion by end of decade
  • Rising investment activity in manufacturing, technology and renewables

A growing number of businesses from the Association of Southeast Asian Nations (Asean) are investing and expected to set up operations in the GCC to capitalise on deepening trade links.

Freddie Neve, senior Middle East associate at UK-based think tank Asia House, said that rapidly expanding ties between the Gulf and emerging economies in Asia are “creating a global shift that will have far-reaching implications for international trade, business and politics”.

Speaking after an event organised by Asia House and private equity firm Gulf Capital on Wednesday, Neve said that the Gulf-Asean investment corridor is growing in both directions and across various industries within the oil and non-oil sectors.

“In particular, Gulf economic diversification is moving at a staggering pace, attracting Asian investment into emerging sectors in the GCC such as construction, renewables and technology. 

“We also expect sustainability cooperation to grow as Gulf and Asian economies transition away from hydrocarbons over the next few decades,” he added.

Until recently, investors from southeast Asia came to the GCC mainly to raise capital, not to deploy it within the Gulf, noted Eric Robertsen, global head of research and chief strategist at Standard Chartered, during the event.

“There is now this narrative of a two-way flow of capital, which didn’t exist before,” Robertsen said. 

Asean member states include Brunei Darussalam, Cambodia, Indonesia, Malaysia, Myanmar, Lao PDR, Malaysia, Philippines, Singapore and Vietnam.

According to a report by Asia House published last November, trade between GCC countries and emerging Asia is forecast to grow to approximately $578 billion by 2030, from around $320 billion in 2019. This will make it the GCC’s biggest trading partner. 

GCC-Asean bilateral trade had dipped in 2020 to $262 billion because of the coronavirus pandemic, the report noted.

However, it has now recovered to levels not seen since 2014 and is expected to continue gathering momentum and surpass GCC trade with advanced economies by 2028, to account for 36 percent of total GCC trade from the current 30 percent. 

Bar Chart, Chart, Monitor

Last year saw Gulf-Asean trade relations “flourish”, according to Asia House, with the signing of several bilateral trade and investment deals. These included the UAE’s Comprehensive Economic Partnership Agreement with Indonesia and the restoration of Saudi-Thai diplomatic ties following a three-decade dispute.

“There are natural synergies between Asean and Gulf visions for economic growth as governments on both sides invest in digitalisation, manufacturing, logistics and infrastructure to grow their exports,” the report said.

More cooperation is expected as bilateral trade rises, to protect and expand those investments, it added. 

Manufacturing is one particular sector that has witnessed a shift in activities between the Gulf and Southeast Asia recently, said Abdulla Al Hashmi, chief operating officer for parks and zones at UAE-based global ports operator DP World. 

“The increase in ocean freight rates in the past two years [due to a shortage of shipping containers globally] has had an impact on people’s ability to export certain commodities, resulting in a change in sourcing patterns,” he said at the Asia House event.

“Certain commodities that started off being produced in Asian countries are now being exported out of the UAE as well, especially products that require specific raw materials that exist here, such as certain chemicals, aluminium and steel-related products. A lot of those products are now manufactured in the UAE and exported to Southeast Asia.

On the back of that, Al Hashmi said he was seeing an acceleration in the number of Asian businesses setting up operations in the UAE.

“People are expanding their businesses, de-risking their supply chain set-up. They want to be closer to market, with a shorter lead time.”

He added: “With the UAE expected to sign more trade agreements with the region, it will become even better for certain producers to use [the GCC] in order to serve the Indian subcontinent, the Levant, the Gulf, East Africa and North Africa, too.”

Thomas Lembong, former trade minister for the Republic of Indonesia, who is now director of the Singapore-based Consilience Policy and an adviser to the Jakarta Investment Board, noted at Wednesday’s event that GCC and nations from southeast Asia share a politically neutral stance that can aid investment flows. 

“They have the luxury of not having to choose sides – at least for a long time to come.” 

Richard Dallas, senior managing director of Gulf Capital, added: “Our journey towards the East has helped many of our portfolio companies to grow exponentially and exit to strategic buyers across sectors. 

“We went back to our drawing board and created a blueprint: invest in mature companies operating in the sectors of the future and expand these companies eastwards across Asia’s growth markets which have comparable fundamentals; leadership vision, expanding urbanism, growing middle class and young tech-savvy populations.” 

Latest articles

Aramco pipelines

BlackRock-led investors to refinance Aramco Pipelines stake

Investors in Saudi Aramco’s gas pipeline network, led by BlackRock, the world’s largest asset manager, are planning to issue $3 billion in bonds to refinance a loan that backed their purchase of a stake in the network.   The consortium of investors took a $13.4 billion bridge loan in 2021 to acquire a 49 percent stake […]

Over the first half of the year Sanad Group signed deals with international airlines including Asiana Airlines and Deucalion Aviation

Mubadala-backed Sanad Group reports 53% revenue growth

Sanad Group, the Abu Dhabi-based global aerospace engineering and leasing company, has seen revenues increase by more than half over the first six months of the year. Figures released to AGBI show revenue totalling AED2.3 billion ($620 million) was reported in the first half of the year, up from AED1.5 billion over the same period […]

Malaysia’s HSS Engineers Berhad and its emirati consultancy HSS signed the deal top oversee construction with the Baghdad municipality

UAE company in joint venture to build Baghdad metro

A Malaysian engineering company and its UAE affiliate have jointly won a $316 million contract to oversee the construction of the new Baghdad metro. The building of the planned 148-kilometre network and its 64 stations across the Iraqi capital was slated to begin this month and end in 2029. This timeline might be delayed, however, […]