China, Japan and India grab the most attention when Canadians think about investing or exporting to Asia.
But companies are overlooking huge and growing opportunities in Southeast Asia, according to Rob Simmons, Export Development Canada’s chief representative for Asia.
Rising wage rates in China, the prospect of an integrated Southeast Asian market as soon as 2015 and a growing middle class makes Southeast Asia increasingly attractive, he said in an interview.
The region is an alternative to China and a viable “launching pad” for getting into the broader Asian market.
“China is the driver of growth for the region, but there’s a lot happening right now in South East Asia that makes it compelling,” Mr. Simmons said.
“There is a huge variety of countries, ranging from Triple-A Singapore to frontier countries such Laos, Cambodia and Burma.”
The 10-member Association of Southeast Asian Nations has a population of more than 550 million and annual economic output of $2.1-trillion. Indonesia alone is a $1-trillion economy.
Mr. Simmons said many companies, including auto parts makers and consumer products manufacturers, are shifting production out of China to countries, such as Thailand, which offer similar labour costs and often better infrastructure.
“It’s a market that’s just starting to evolve and change,” he said.
Canada’s two-way trade with the region was worth $15.5-billion in 2011. But Canada had a sizable trade deficit, and exports continue to concentrate in commodities such as wheat, coal and potash.
More than half of Canadian exports to the region are financed by EDC, a federal Crown corporation.
“Canada is still perceived as a commodities supplier,” Mr. Simmons said. “We sell the things that these countries need to make them grow.”
Whether “Canada brands itself well enough” in Asia is a legitimate question, he said.
“We don’t have the major corporate players that are recognizably Canadian,” he explained.
Among other things, the region offers opportunities for Canadian companies in telecom, auto parts, clean technology, aerospace, mass transit, food processing, health care and gas transmission, Mr. Simmons said.
“Commodities are important, but we want to encourage deeper links to Asia, and more value-added products,” he added.