South-east Asia – the next financial and education hotspot

This year is a major milestone for the 10 countries (Brunei Darussalam, Cambodia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) forming the Association of Southeast Asian Nations (ASEAN).

The ASEAN Economic Community (AEC) is set to come into being at the end of this year according to its Blueprint document. While some observers are sceptical about the progress achieved so far, the ASEAN leaders indicated at their 26^th Summit that more than 90% of the AEC’s high-priority goals had been achieved.

Increasing wealth

The region’s growing economic prominence is expected to accelerate in the next 10-15 years to become the world’s main manufacturer and main energy consumer. The region’s largest countries (Indonesia, Malaysia, Philippines, Thailand and Vietnam) are also projected to be among the world’s fastest growing economies with Indonesia set to see largest increases in its projected GDP between 2014 and 2030, with only China, India and the US ahead.

Booming youthful population

Indonesia and the Philippines are set to see the largest increases in their youthful population with the 20-year-olds projected to increase by 24% and 23% respectively by 2030 compared with 2010. This is also in stark contrast with major demographic declines across East Asia’s major economies of China, Japan and South Korea.

What does this mean for education?

Previous studies carried out for the British Council found that a country’s wealth and youthful population are key drivers for education demand. This is highly likely to see further acceleration with the AEC common labour market. The blueprint of the community envisages labour flows limited to the highly skilled only. Rise in the demand for qualifications in core areas will be pivotal to growth in services driven economies, the latter have seen increasing contribution to countries’ gross domestic product (GDP) over the past years. The Philippines was second to Singapore only with services’ contribution to GDP at 58% in 2013 followed by Malaysia and Thailand, where almost half of the wealth was produced by the services industries.

In addition to the above, a country’s ability to nurture talent is believed to be a key factor for innovation, competitiveness and growth. The human capital index developed by the World Economic Forum ranks the Philippines’ 15-24 age group 20^th in the world, ahead of Japan, Singapore, France and the UK. Vietnam (ranked 29^th) and Malaysia (ranked 30^th) are also in the world’s top 30 countries, out of 124 in total.

Deploying disruptive technologies are expected to drive the region’s productivity and competitiveness. In addition to infrastructure in place, ASEAN competitiveness will depend on the right workforce skills. Increasing demand for talent across the member states will most likely stimulate student mobility to countries within the region with the right education offer. This will be in addition to flexible and innovative means of delivering education and training through distance learning and online, which is the quickest response to fast paced changes in employer demand. The adoption of English as the official language of the ASEAN is an added advantage to those delivering training in English. The success of the education and training offer will, however, depend on how tailored it is to the region’s needs and accommodating of its diverse mix of cultures.

The next hot spot for consumer demand and investment

For many ASEAN governments education is a means to deliver on national priorities and accelerate economic growth. Significant increases in the number of tertiary educated students, levels of urbanisation and the middle class population have signalled a growing appeal of the region to potential investors. This is evidenced by significant increases in foreign direct investment flows to ASEAN, which reached US$128.4b last year, whereas those to China dipped to US$117.6b.

McKinsey forecasts the current “consuming class” in the region (households with income above US$7,500) will almost double by 2025 to reach 127 million households ASEAN can be seen as a long game, but, an early engagement may bring the rewards of a head start.

Janet Ilieva is the founder and Director at Education Insight .