SOUTHEAST ASIA OUTLOOK 2025

Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact

FDI Inflows Across SEA

SEA’s share of global exports accounted for almost 8% of global exports in 2023, with total merchandise exports increasing by approximately 43% as compared to that in 2013. The growth of exports is expected to drive sustained demand for industrial real estate, including factories and logistics facilities, which are being developed across the region. Southeast Asia’s exports to grow

300

250

200

Southeast Asia Share of Global Exports

150

16%

100

US (BILLIONS)

50

12%

0

Pre-pandemic Average (2015 -2019)

2020

2021

2022

2023

Estimated 2024¹

8%

Singapore Indonesia Vietnam Philippines Malaysia Thailand

Source: ASEAN Stats, Countries’ Statistics Website, Trading Economics, Cushman & Wakefield Research Note: 1 Estimated for 2024 using annualization

4%

% of Global Merchandise Exports

Manufacturing in SEA captures a significant share of inward FDI inflows, at about 21.8% of total inward FDI inflows in 2023, according to ASEAN Secretariat report. Notably, greenfield FDI in manufacturing activities in the ASEAN region has surpassed China as the preferred destination for manufacturing investments from OECD 1 -headquartered companies, according to fDi Markets data. Between 2022 and 2023, companies pledged over US$55 billion to establish factories in ASEAN, more than doubling the US$21 billion announced in China during the same period. Note: 1 OECD is an international organisation with 38 member countries which includes major economies such as United States, United Kingdom, Japan, Australia, Korea etc.

0%

ASEAN

Singapore

Viet Nam Malaysia

Indonesia

Thailand

Philippines

2013 2023

Source: WTO, Cushman & Wakefield Research

Navigating uncertainty

Greenfield FDI into Manufacturing Activities by OECD-headquartered Companies

The United States’ recent introduction of broad tariffs has raised further concerns about the global trade environment and SEA, an export-oriented region would inevitably be impacted. Global geopolitical uncertainty could delay capital spending as companies take a wait-and-see approach. Nonetheless, with SEA’s cost advantages and rising intra-regional trade, the trend of supply chain diversification towards SEA is expected to persist, though we may see a higher degree of further diversification even within SEA. Extended supply chain ecosystems are likely to emerge as manufacturers diversify, mitigate risk, and optimize costs, leveraging growing intra-Asia trade flows. This trend could spur investments in other manufacturing hubs in the region as industrialists seek to de-risk their supply chain from geopolitical developments. though this will be contingent upon factors such as industry suitability, infrastructure support and availability of talent. Malaysia and Thailand could be markets to watch given their strategic geographical proximity and are established electronics manufacturing hubs. Indonesia has become a strategic market, emerging as a key beneficiary of nearshoring trends while also leveraging its vast population and rapidly expanding consumer market.

70

60

50

40

30

20

US (BILLIONS)

10

0

2011

2017

2021

2012

2013

2015

2018

2019

2016

2014

2010

2022

2023

2007

2020

2005

2008

2009

2006

2004

China

Asean

Source: fDi Market, Cushman & Wakefield Research

8

9

CUSHMAN & WAKEFIELD