I actually took some of this information and used it as the basis of my Marketwatch New Columnist contest entry (shameless plug: Vote for me here!). Likely due to coincidence, Marketwatch actually posted a relatively large special feature on the exact same topic, focusing on Philippines and Indonesia as entering a period of strong growth potential. Its good to see they are now picking up on some of the same stories I've been pushing for a while.
In this post, I'll list of some of the information they shared in their feature as a synopsis as well as my take on it.
Noting that both countries got bailed out only a decade ago during the Asia financial crisis, both have recently become the opposite, now pledging 1 billion each to the IMF instead. Both of them have been growing for 3-5 yrs and have received investment grades. Debt stands at only 25% and 41% of GDP for Indo and Philippines respectively (much better than US/Spain/Italy/Japan,etc). A third of the workforce is still in agriculture so although it has grown, there's still quite a bit of ways to go, especially in investment in infrastructure and industrialization.
Indo - $850B GDP, 241 million population, and half lives on $2 a day. A large need for infrastructure development is needed outside of the big main cities. Though the biggest economy, the stock market cap for Indo is only half that of Singapore and Thailand so there is significant pricing mismatch for corporate equities as well as many unlisted companies that will eventually IPO.
Philippines - Though the economy hit a minor soft patch in 2011, 2012 has done well and the economy is improving again. Business process outsourcing has surpassed India and looks set to grow further with millions of English speaking young semi-educated population. Its only the 2nd youngest country with half the population under 23.1 yrs. Industrial manufacturing is a core area that needs to grow however.
U.S. exchange-traded fund giant iShares, managed by BlackRock Inc. , launched U.S. traded ETF funds for both Indonesia and the Philippines in 2010 — the iShares MSCI Philippines Investable Market Index and the iShares MSCI Indonesia Investable Market Index .
Still, infrastructure development has been lacking, he said. “This is a headwind for companies in many different ways. Distribution costs can be high as the roads are not very good, for example,” he said.
Indonesia is also a resource-rich country and some companies are focused on extracting commodities, which hasn’t benefited their share prices in a year where commodity prices have suffered amid concerns about global growth. Read more about Indonesia.
The Philippines, in contrast, doesn’t have the same exposure to the global trade cycle though commodity prices.... The country became an investor favorite as “it suddenly had some very positive surprises such as progress on public-private partnerships and so there was more investment into the economy,” said Adrian Zuercher, emerging-markets investment strategist at Credit Suisse Asset Management in Hong Kong.
(5) - Data & Charts:
Follow the link for some charts such as unemployment, life inflation, market capitalization, etc.
(6) - Other articles:Need for Entrepreneuers
Banks Flourish in Indonesia & Philippines