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ASEAN’s Growth Frontiers and Doors to AEC: Malaysia and Thailand

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Frost & Sullivan Analyst Briefing on Emerging Markets - ASEAN’s Growth Frontiers and Doors to AEC: Malaysia and Thailand

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ASEAN’s Growth Frontiers and Doors to AEC: Malaysia and Thailand

  1. 1. Emerging Market Growth – Executive InsightsASEAN’s Growth Frontiers and Doors to AEC: Malaysia and Thailand © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenters Host: Monsinee Keeratikrainon Country Manager – Thailand Aroop Zutshi Hazmi Yusof Global President & Managing Partner, Frost & Sullivan Vice President, Asia Pacific 2
  3. 3. Today’s Agenda Speaker Description Timing Aroop Zutshi Introduction to Emerging Market 10 minutes Innovation & Economic Development Innovation Monsinee Kee Overview: ASEAN 15 minutes Overview: Thailand and Focus Industries Hazmi Yusof Overview: Malaysia and Focus 15 minutes Industries Q&A 5 minutes 3
  4. 4. Overview on Emerging Market Innovation & Economic DevelopmentInnovation Aroop Zutshi Global President & Managing Partner Functional Expertise: 20+ years of growth management expertise working with companies to design growth strategies for their existing portfolio of product/offerings, and facilitating the development of market entry strategies especially in emerging markets. Particular expertise and close association with global major companies in:  New product introduction  Geographic Expansion  Outsourcing 4
  5. 5. Game Changer – Emerging Market Innovation (EMI) &Economic Development Innovation (EDI) Source: Frost & Sullivan The new goal of the game is about getting the other side to come over and not loose the winning advantage Countries are competing among themselves to attract & retain FDI from corporations, utilizing technology and knowledge capital, while providing supply-chain ecosystem and enabling hard and soft infrastructure. 5
  6. 6. EMI & EDI – The Value Proposition Framework Source: Frost & Sullivan 6
  7. 7. Join us at GIL, Silicon Valley – Sept 9-12th 2012WS4. EMI 2012 – The Emerging Markets Innovation Summit 2012 - Sep 12th9:00am -9:45am EXECUTIVE BULLETIN Your Growth Blueprint: Emerging Market Innovation (EMI) & Economic Development Innovation (EDI) Programs9:45am -10:15 am EXECUTIVE BULLETIN AND INTERACTIVE EXERCISE Achieving a Powerful and Sustainable Country Pipeline10:15am -11:00 am INTERACTIVE EXERCISE & WORKSHOP Using the Tool Kit & Developing a Systematic Approach to Emerging Markets11:00am -11:15 am Networking and Refreshment Break11:15am -12:15 pm INTERACTIVE Ask the Global Experts – Growth Perspectives (from both sides of the field)12:15pm -12:30 pm CONCLUSIONS The Emerging Markets Innovation Summit -Concluding Remarks 7
  8. 8. Corporations and Governments: The Rules of Engagement Just Changed FDI Inflows, Select Emerging and Developed Markets, 2000-2011 2,000.00 ASEAN’s Share of Global FDI 1,800.00 Inflows increased from 4.4 % ThailandFDI Inflows ($ Billion) 1,600.00 in 2006 to 7.6 % in 2011. 1,400.00 • Emerging hub for 1,200.00 production of auto parts 1,000.00 and automotives 800.00 600.00 Korea 400.00 • Seeking to be East Asia’s 200.00 financial hub 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Malaysia Total FDI in Emerging Markets ($ Billion) Total FDI in Developed Markets ($ Billion) Note: Emerging markets considered are based on Frost &Sullivan’s Emerging Market Index • Knowledge hub for energy, resources and technology Share of Developed Markets in Share of Developed Markets in Global FDI: 63.3% Global FDI: 49.9% Chile Share of Emerging Markets in Share of Emerging Markets in • Counter-magnet to Silicon Global FDI: 16.9% Global FDI: 32.2% Valley Sources: OECD, UNCTAD and Frost & Sullivan 8
  9. 9. ASEAN in the Sweet Spot of Economic Growth- AttractingFDI, Surging Middle Class and High Investor Confidence “…the timing was good since the EU was keen to increase trade and investment cooperation in Asia and the FTA could help clear existing trade barriers”-Srirat Rastapana, director-general of Trade Negotiations Department Top 10 Investors , ASEAN, 2008-2010 Sharp recovery since 2009, ASEAN FDI inflows increased from $37.9 billion in 2009 to $76.20 billion in 2010 150.0 $76.20 billion Composition of FDI by Investor $47.08 billion 100.0 (%) 50.0 23.9 22.3 14.9 0.0 2008 2009 2010 ASEAN USA Japan European Union (EU) China Republic of Korea Australia India Note: ASEAN FDI refers to inter ASEAN regional inflows. Sources: Bangkok Post , ASEAN and Frost & Sullivan 9
  10. 10. The Rise and Impact of the ASEAN Economic Community(AEC) by 2015 Market size of 1 Billion Emerging Trends, AEC, 2012-2015 Automotive Sector: 80 cars New growth economies: per 1000 inhabitants Indonesia & Vietnam AEC 2015Human Capital Challenges & The Asian Middle Class Opportunities Access To Key Emerging Markets Sources: ASEAN and Frost & Sullivan
  11. 11. Emerging Market Growth – Executive Insights: Save the Date! Region Spotlight Countries Live Date of Session Latin America Colombia & Mexico March 27th Asia Pacific Sri Lanka June 20th Asia Pacific Thailand & Malaysia July 19th Central and Eastern Europe Turkey & Ukraine September 25th Middle East and Africa Egypt & Nigeria November 15th Briefing completed 11
  12. 12. Like the Content: How to Access? Leverage full benefits of: + + +Growth Partnership Growth Team Membership GIL Global Community Services  Access content on www.frost.com  Contact regional AE for more information – myfrost@frost.com 12
  13. 13. Frost & Sullivan’s Regional Expert Commentary: Thailand Monsinee Keeratikrainon Country Manager – ThailandFunctional Expertise:• 12 years of experience in business strategy and management consulting across technology sectors in Thailand while helping large organizations develop business strategies, pertaining to: • Strategic planning (business & technology) • New product & service R&D • Competitive analysis and market expansion • Business process transformation• More than 10 years experience in class room teaching and corporate trainings & workshopsParticular expertise:• Telecom sector (service providers) and ICT solution providers• Banking & Financial services• Service and Manufacturing industries 13
  14. 14. ASEAN and AEC(Association of South-East Asian Nations and ASEAN Economic Community) 14
  15. 15. ASEAN Integration: The Growth Frontier The Association of Southeast Asian GDP (PPP) per capita, ASEAN-5* GDP, 2002 - 2011 Nations (ASEAN) 6,000 was established on 8 August,1967, Current International Dollar ($) consisting of 10 countries under the 5,500 theme 5,000 “One Vision, One Identity, One Community" 4,500 4,000 3,500 3,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 *Composed of 5 countries: Indonesia, Malaysia, • 10 Countries Philippines, Thailand, and Vietnam. • 600 Million Population • GDP: US$1.800 Trillion • World’s 9th Largest Economy • Market Capitalization of Listed Companies $2.000 Trillion • Predicted GDP Growth between 5.6% and 6.3% for 2013 Source: International Monetary Fund, World Economic Outlook Database, April 2012 & CIA-The World Factbook
  16. 16. ASEAN Economic Community (AEC) • After the completion of ASEAN Free Trade Area (AFTA), the Bali Concord II Statement was announced in the 8th ASEAN Summit in 2003, to take AFTA to the next level, ASEAN Economic Community (AEC) • Following the success of the European Economic Community. Later in the 13th ASEAN Summit in 2007 in Singapore, ASEAN leaders adopted the ASEAN Economic Blueprint to serve as a coherent master plan guiding the establishment of the ASEAN Economic Community 2015. Areas of Cooperation, AEC, 2012AEC is set to be the center of regionaleconomic integration by 2015, given the Human resources Closer consultation onfollowing key characteristics: development macroeconomic and financial and capacity building policies• A single market and production base Development of electronic• A highly competitive economic region transactions through e- Trade financing measures• A region of equitable economic development ASEAN• A region fully integrated into the global Recognition of professional Enhancing private sector economy qualifications involvement for building AECAEC will transform ASEAN into a region with Integrating industries acrossfree movement of goods, services, Enhanced infrastructure and region to promote regionalinvestment, skilled labor, and freer flow of communications connectivity sourcingcapital. Source: aseansec.org 16
  17. 17. Thailand 17
  18. 18. Thailand:Hub of Greater Mekong Subregions and Gateway to ASEAN • Strategically located in the connected areas of ASEAN and hub of Greater Mekong Subregion (GMS) • Northern border connected via Myanmar to China and India • Eastern border connected via Lao and Cambodia to Vietnam • Southern bordered connected via Malaysia to Singapore • Total population is 64.0 million of which approximately 9.3 million live in Bangkok and its vicinities. 94.0 percent of the population are Thai-speaking Buddhists; Thai is also the official language of the country. • More than two thirds of GDP is export-dependent. Thailand is • The worlds largest cassava exporter • The 2nd largest exporter of gypsum • Leading exporter of rice and a major exporter of shrimp, • Exporter of high-tech products such as integrated circuits and parts, electrical appliances, and vehicles. • According to HSBC’s “Global Research Report – The World in 2050”, Thailand would be the world’s 22nd largest economy in 2050, 3rd largest in South East Asia after Indonesia and Malaysia Source: Frost & Sullivan 18
  19. 19. Thailand boasts of one of the highest GDP’s in the Region Key Economic Indicators, Thailand, 2011 GDP ($ Billion), Thailand, 2001-2011 350.00 Indicator (2011) Value 300.00 GDP per capita $9,700 GDP ($ Billion) 250.00 GDP Growth 0.1% 200.00 150.00 Inflation 3.8% 100.00 Unemployment 0.7% 50.00 GDP Composition (2011) 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Agriculture 25.2% GDP Comparison, South East Asia Select Economies, 2011 Industries 69.3% Vietnam 104.00 Services 5.5% Philippines Singapore Key Sectors Hong Kong • Automobiles and automotive parts (11.0%), Malaysia • Financial services (9.0%) • Electric appliances and components (8.0%), Thailand 319.00 • Tourism (6.0%) Indonesia • Cement, auto manufacturing, heavy and lightSouth Korea industries, appliances, computers and parts, furniture, 1014.00 plastics, textiles and garments, agricultural processing, 0.00 200.00 400.00 600.00 800.00 1,000.00 1,200.00 beverages, tobacco GDP ($ Billion) Source: Tradeeconomics.com , The World Bank Group and Frost & Sullivan 19
  20. 20. Exports and Tourism drive Thailand’s Economy Value of Exports, Thailand, 2000-2010 • Thailand is heavily dependent on exporting, about two thirds of GDPExports ($ Million) • Industrial economic growth in the region is led by Oil & Gas, Mining & Commodities, Manufacturing, (Automotive & Transportation, Chemicals & Materials & Food, Electronics) and Services • In the service sector, tourism is one of the biggest proportion • Latest trend is Medical tourism as Thailand is recognized one of the top-10 medical tourism destinations due to its internationally accredited medical facilities and qualified medical professionals with state-of-the-art technology and service excellency at much lower cost. Room of Bangkok Hospital in Phuket Source: Frost & Sullivan 20
  21. 21. Thailand has one of the Strongest and Highest-growth Capital Market in the Region Index Performance, Select Countries, 2010-2011 Note: Data as at end December 2011 Thai Listed Companies Regardless of the political turmoil and floods, the capital market keeps Thai market’s dividend yield growing at fast pace since 2007 of 3.73 percent at the end of Q1, 2012 making it Asia’s • Average 16.0 per cent profit growth second-highest dividend yield since 2009 • Annual 17.0 percent growth of dividend payment since 2008 Source: Stock Exchange of Thailand and Frost & Sullivan 21
  22. 22. Large Investments in Hard Infrastructure will AugmentGrowth • Floods in 2011 caused physical and economic damages up to $30.00 billion. The Water Management and Floods Prevention country had a slowdown in Q4, 2011 and started to pick up in late Q1, 2012. $10.00 billion • Several TORs related to water and floods management will be released by Q3 for both local and MNCs firms. Infrastructure to connect • Thailand aims to be the logistics hub of ASEAN, thus working closely with Thailand and Myanmar under Dawei Development Myanmar government on Dawei Development projects, aiming to connect $3.00 billion Thailand, Myanmar, China, and India through integrated infrastructure. Airport Expansion • Airport Authority of Thailand (AOT) has finalized the expansion plan of and ASEAN integrated aviation Suwannabhum airport (Phase 2) in May 2012 due to its peak capacity. $2.00 billion • 51.0 million people is expected to travel this year while capacity is 45 million. • 3G licensing is underway (Q3, 2012). Three major operators are expected to 3G, IDC and Cloud roll out 3G nationwide within 2012-2013. Infrastructure $1.00 billion • All key IDC players are upgrading their capacity due to high growth & demand from companies recovered from floods and those who want to prevent • Government injected $100.0 million for funding renewable energy while private Renewable Energy companies started to explore invest in special plants, i.e. solar cell plant, $0.50 billion biogas plant. • Source: Frost & Sullivan 22
  23. 23. BMA as the Focal Point for Development of SoftInfrastructure Bangkok Metropolitan Area (BMA), Thailand, 2011 6 Provinces surrounding BMA with almost• Government strongly realized the needs to 14.0 Million population improve human capital to be ready for (Out of total 77 provinces / 64.0 Million population) AEC, thereby the budget for fiscal year 2013 is allocated to Ministry of Education at the highest proportion than other Ministries ($1.50 billion) Patumthani• This year there was some initiative already begun, buying tablets for rural students (using $300.0 million budget) Nakornpatom Nonthaburi• Urbanization is getting higher in all 3 regions. Most rural development projects are related to Industrial (e.g. Industrial Bangkok Zones/ Estates)• Soft infrastructure e.g. financial system and healthcare system in Bangkok Metropolitan area is one of the most advanced in region Samutsakorn Samutprakan Source: Frost & Sullivan 23
  24. 24. Thailand’s Megatrend Vision: Empowered, Urban, TradePromoting, Well-Developed • Almost 22.0 percent of population lives in Bangkok Metropolitan and Nearby Areas (consisting 6 provinces) • A few big cities representing each region, i.e. • AFTA (ASEAN Free Trade Areas) – 10 • North Region – Chiang Mai, ASEAN countries Chiang Rai • ASEAN-China Free Trade Zone • Northeastern – • ASEAN Economic Community (AEC) to Nakornrachasima, Ubonrachatani be enacted in 2015 • Eastern – Chonburi, Pattaya AEC is more than just free-trade areas but • Southern – Nakornsrithammarat, integration of economic activities in the Hadyai, Phuket region including investment – free flow of capital and manpower, harmonization of regulations • New hard infrastructures are underway • More needs for imported know-hows • Thailand is amongst the top-3 countries in the and foreign capitals world with highest proportion of Female top • Not only in BMA but also major cities executives and areas connected to neighboring • Around 40.0 percent of top management positions countries in Thailand are held by women (compared to average of 20.0 per cent globally) • More female population in universities than male • >50.0 per cent of female population have higher graduated degrees Source: Frost & Sullivan 24
  25. 25. Investor friendly Thailand sees a Surge of FDI Inflows FDI Applications and Combined FDI Value, Thailand, 2011 and 2012 • More than 60.0 per cent of FDI is from Japan • More than 60.0 percent of FDI are export- focused manufacturing • The top area of FDI is Electronic and Electric as Thailand is the #1 hard-disk producer of the world, dominated by Western Digital and few other leading brands Source: Thailand Board of Investment and Frost &Sullivan 25
  26. 26. Focus Industries Automotive Healthcare Chemicals and Materials 26
  27. 27. Thailand: High-Growth Sectors Industry Snapshot Key Players Thailand is ASEAN’s Toyota, Nissan, Isuzu, and - Largest market for light commercial Honda all have long vehicles (LMC) established manufacturing - Largest exporter of tires facilities in Thailand and - Largest importer of Steel becoming hub of regional Automotive and global exports - Thailand, Singapore, and India are the top Bangkok General Hospital destinations for medical tourism in Asia and Bamrungrad Hospital are (Source: Center for Medical Tourism the top 2 players with best-in- Research) class technology while - Leading hospitals in Bangkok have at least providing services like 5-star Healthcare 1/3 of expatriate patients hotels - Largest local conglomerates like PTT and PTT Chemical have vertically SCG are strongly dominating this market. expanded globally, esp. in Both are the Thai’s top-5 listed companies bio-chem, recently partnered - Both companies are investing in global with a U.S. lab, Myriant Chemicals/ chemicals/biochem businesses and Technologies, to research & Materials research labs develop green chemicals 27
  28. 28. Malaysia 28
  29. 29. Frost & Sullivan’s Regional Expert Commentary: Malaysia Hazmi Yusof Vice President, Asia Pacific Frost & Sullivan Asia Pacific Kuala Lumpur Malaysia Functional Expertise • Hazmi is the Vice President for Frost and Sullivan Asia Pacific with the portfolio of covering Malaysia Business and operation. He has been in the business advisory and consultation industry since 2001. • He also has the experience being on the client side, a government linked company (GLC) being part of the successful business transformation . • His expertise lies in business and market intelligence and business transformation strategies. He sits in numerous project steering committees for projects in the Asia Pacific region Industry Expertise / Projects Undertaken • Project steering committee member on a feasibility study on establishing a port in Malaysia. The feasibility on location, construction and operation of the port and potential trade volumes and routes. The stakeholders included government ministries, state government and agencies. • Project quality control supervisory team member for a manufacturing technology roadmap specifically for the electrical and electronic sector. The roadmap entails developing a blueprint ,implementation strategies and financial assessment. The stakeholders included multinational companies, state governments and agencies. • Project team member of a baseline study for business and technology transformation blueprint for a Port Authority in the Middle East. The scope covers international benchmarking with other ports, technology roadmap macro business process engineering and human capitol development strategy. • Project team member on a human capital supply demand study for the ICT Industry as part of the K workers Development Initiatives. The scope covers corporate demographics, gaps in manpower supply and demand and overall manpower needs and Human Resource metrics for the next five years. 29
  30. 30. Malaysia gains Visibility in Global Economy • Malaysia Tops the Asia IPO Market for 2012 • Going Forward with Public-Private Sector Partnership through its National Transformation Program Source: Reuters, Bloomberg and Frost & Sullivan 30
  31. 31. Driven by Services, Malaysia is on a GrowthTrajectory Key Indicators, Malaysia, 2010 Composition of GDP, Malaysia, 2010 Indicator (2010) Value Sector Share (%) GDP ($ Billion) 238.00 Agriculture 7.3 GDP per capita $8,423 Mining 7.0 GDP (PPP), share of world 0.6% Construction 27.6 total Services 57.7 Population 27.9 million Growth is driven by consumption and investment Demand-side Composition of GDP, Malaysia, 2010 9.4 10.9 2.1 11.0 53.2 13.4 Private Consumption Public Consumption Private Investment Public Investment Note: All values are in percent Net Trade Inventory Source: ETP Annual Report 2011 and Frost & Sullivan 31
  32. 32. Soft Infrastructure: Global Rankings are Evidenceof Malaysia’s Investment Attractiveness FDI Confidence Indicators, Select Countries in APAC, 2010 and 2012 30 FDI Confidence Indicator (Rank) 25 20 15 10 5 Rank moved up 0 Rank moved down China India Singapore Indonesia Malaysia Vietnam Thailand Taiwan 2010 2012 Global Competitiveness Index, Malaysia, 2009, Ease of Doing Business, Select Countries in APAC, 2012 2010 and 2011 Regional Average (East Asia&Pacific) 91 China Taiwan,China Year Rank Trend Japan Malaysia 18 2009 24 Thailand 2010 26 Korea Republic Hong Kong SAR, China 2011 21 0 20 40 60 80 100 Rank (out of 183 Countries) Sources: World Economic Forum’s Global Competitiveness Report 2011, A.T. Kearney and Frost & Sullivan 32
  33. 33. Vision 2020 set to Propel Malaysia’s EconomicDevelopment ETP Targets for Economic Development, Malaysia, Objectives of Economic Transformation 2020 Program, Malaysia, 2010 Onwards Gross National People/Jobs Income (GNI) • 31.6 million • Target $15,000 per capita population • USD523 billion GNI • 3.3 million • 6% GDP growth per High-Income annum additional jobs Target USD 15,000 GNI per capita by 2020 Targets for 2020 Quality of Life Inclusiveness Sustainability Transformational Investment Enables all communities Meets present needs Actions to benefit from the without compromising • $444.00 billion investment wealth of the country future generations • 12 NKEAs • 92% private investment • 131 EPPs • 8% public investment • 60 BOs • 73% domestic direct • Transformational investment approach • 27% foreign direct • Private sector led investment Source: New Economic Model for Malaysia, 2010, Pemandu and Frost & Sullivan 33
  34. 34. Growth Drivers For Economic Transformation National Key Economic Areas, Malaysia, 201212 Key Economic Areas  To kick start the(11 Industry Sectors + Greater Kuala Lumpur) Tourism Economic Financial Transformation Education Services Communications Program. Content and Infrastructure (CCI)  Based on 10 Greater Kuala Lumpur/Klang year project that Valley targets high income. National  Private Sector Key Ecominc drives high Business Areas Services (NKEAs) Agriculture impact projects, Palm Oil government support through policies and Oil, Gas and Healthcare incentives. Energy  Target is high income nation Electronics and Wholesale Electrical (E&E) and Retail by 2020 Source: ETP, 2010 and Frost & Sullivan 34
  35. 35. Focus Industries • Oleochemical derivative products Tangible • Food & health-based downstream based, segments commodity Palm Oil type export • Bio fuels • Health metropolis Non-tangible Healthcare • Health travel based, Services services • Develop medical hub related export 35
  36. 36. Megatrends Impacting Opportunities in Palm Oil Urbanisation • World urbanisation driving strong and increasing demand for energy and primary commodity such as food • The forecast average world urbanisation rate in 2050 is 68.7 percentage points, an increase of approximately 18.2% from 2010. Renewable Energy Sustainable Source For Consumers • Bio Fuel to counter the rise of Crude Oil prices and its • Food and non food applications forecasted shortages • Food: cooking oil, margarine, • Sustainable alternative fuel bakery shortening, • Byproduct converted to confectionary fats Biomass • Non food: soap, detergent, toiletries, cosmetics. Demographics New Applications • Growth in world population and higher • New applications: polyols for making population growth rates in developing polyurethane countries. • ‘Polyurethane’ is broadly use in • Growth is close to source: crops are located manufacturing and consumer goods. in the region of developing countries i.e., Asia, Africa and South America. Source: Frost& Sullivan 36
  37. 37. Palm Oil : A Key Industry for the MalaysianEconomyForecast of Supply, Demand and Annual Average Local Delivered for CPO, Global, 2010-2015 4th largest contributor to the economy at US$17.00 Billion in 2011. In 2020 to be US$58.00 Billion providing employment 2nd largest exporter in the world exporting to for 41,000 150 countries people• The global palm oil demand is forecast to grow at a CAGR of 4.8 percent• Projected growth of palm oil and palm oil related products is driven by multiple factors which includes growing demand for food due to growing population, economic development in Asia Pacific including East and Central Asia and Latin America. Sources: OIL WORLD, World Bank and Frost & Sullivan 37
  38. 38. Felda Global Ventures: A Global integrated anddiversified agri-business multinational Company Profile World’s 2nd Biggest IPO in 2012 FGV is a global diversified agribusiness oil palm plantation operator  Initial Public Offering raised US$3.2 Billion which is also involved in the downstream processing and refining.  Out perform world biggest IPO in Facebook. FGV is the world’s 3rd largest oil palm operator.  Price on listing at RM5.39 – 21% above retail Its agricultural and agri-commodities operations spans across 10 and 18.5% above institutional price. markets, including Indonesia, China, India, North America, South  12 cornerstone investors secured, Africa and Turkey. oversubscribed by 6.75 times. Development Plans FGV Growth Strategy 2010- 2015 Growth Initiatives in 2012-2015: Expanding in Africa for Palm Oil, rubber in Myanmar, Cambodia and sugar in Indonesia, Myanmar and Cambodia Land bank Intensify Research Expand Downstream acquisition and & Development Expanding downstream market in China, Capabilities expansion India, Myanmar. Possible partnership with Louis Drefus Group Sources: FGV and Frost & Sullivan 38
  39. 39. Focus Industries Palm Oil Healthcare Services 39
  40. 40. Megatrends Impacting Opportunities in Healthcare Demographics • Fighting chronic conditions (heart disease, diabetes, congestive heart failure, asthma, depression, arthritis, etc.) • Treating underserved populations and addressing inequalities in health outcomesSafety & Outcomes Economics • Reducing medical errors and • Incentivizing patients to adopt healthy misdiagnoses behaviors, including children • Reducing inefficiencies and • Greater transparency and accountability unnecessary, wasted care of outcomes and costs by healthcare • Reducing infant mortality providers • Reigning in drug costs • Greater bundling of charges for healthcare services and tying payment to outcomes Convergence Globalization • Expansion of retail medical clinics • World patients, SEA as World’s • Digitization of healthcare information management hospital and interactions between patients and providers • Asian companies emerging • Improving primary care and collaboration across all • Partnerships between Asian and healthcare providers, i.e. “medical home”, Western companies hospitalists, etc. Sources: Frost & Sullivan 40
  41. 41. Innovation to drive the Ability to ‘serve more with less’ withRapid Population Growth and Aged Population GrowthDemographic Indicators, Global, 2010 China Japan • 1,300 Million population • 127 Million population • 3 Million hospital beds • 1.8 Million hospital beds • 2.2 beds/1000 people • 9.9 beds/1000 people • 1.4 doctors/1000 people • 2.7 doctors/1000 people • 60,396 hospitals • 7,785 hospitals India South Korea • 1,100 Million population • 48 Million population • 0.8 Million hospital beds • 283,000 hospital beds • 0.7 hospital beds/1000 people • 5.5 hospitals beds/1000 people • 0.6 doctors/1000 people • 1.7 doctors/1000 people • 13,896 hospital • 997 Hospital Thailand • 66.3 Million population Malaysia • 141,500 hospital beds • 28.3 million population • 2.13 beds per 1000 of the • 50,000 hospital beds population • 1.62 hospital beds / 1000 people • 0.37 doctors /1000 people • 1.05 doctors/1000 people • 1,334 hospitals • 347 hospitals Australia Singapore • 27 million population • 5.08 Million population • 213,000 hospital beds • 10,387 hospital beds • 7.9 hospital beds / 1000 people • 2.04 beds per 1000 of the population • 2.5 doctors/1000 people • 1.7 doctors /1000 people • 1,317 hospitals • 23 hospitals Source: Frost & Sullivan 41
  42. 42. Healthcare Expenditure & Funding 20.0 Healthcare Expenditure, Select Countries, 2007-2015Healthcare Expenditure (% of 15.0 10.0 GDP) 5.0 • Malaysia spent an estimated of 4.4 percent of GDP on healthcare in 2011 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 • The allocation per capita in 2010 was Japan Indonesia Malaysia Singapore USD 366, which is the second highest Thailand UK USA in ASEAN region 70.0 Trends in HC Expenditure, Malaysia, 2000-2010 • At present government expenditure,Source-wise HC Expenditure constitute 56.4 percent of total(% of Total HC Expenditure) 60.0 50.0 expenditure with the balance being 40.0 covered by healthcare insurance, out- 30.0 of-pocket spending and private sector 20.0 10.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Government Expenditure on Health (% of Total HC Expenditure) Private Expenditure on Health (% of Total HC Expenditure) Out of Pocket Expenditure (% of Total HC Expenditure) Source: Frost & Sullivan 42
  43. 43. IHH Healthcare: Global Healthcare ServicesProvider Company Profile World 3rd largest IPO in 2012 Premium brand healthcare services from primary  Initial Public Offering raised US$2 Billion healthcare clinics, to secondary to tertiary hospitals, and  Largest dual listing in two ASEAN stock exchanges in Malaysia and post operative rehabilitation centre. Singapore.  IHHs market capitalization is $7.3 Billion), is the second largest listed Operates in Malaysia, Singapore, Turkey, India, China healthcare provider after HCA Holdings in New York. and investments in Hong Kong, Brunei, Vietnam and  22 cornerstone investors secured including Government of Singapore & Macedonia. Kuwait, Temasek, Mitsui, Usaha Tegas, World Bank, insurance & Mitsui Group, Mitsui & Co., Ltd of Japan is one of the pension funds, private equity. majority shareholder. Competitive Advantage Business model Wide range of Presence in Key presence services within the significant high in markets that mid to higher end growth markets are hubs for target market medical travel. Source: Frost & Sullivan 43
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