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AseanAffairs Magazine July - August 2010

New Philippines President Benigno “Noynoy” Aquino wins in a landslide election and promises to end poverty and fight corruption.

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                                                           GROW YOUR BUSINESS IN INDIA   


>>One of the reasons why China has developed so fast is due to the fact that in the last 15 years a lot of investment has been poured into the upgrading of the infrastructure. India should follow this example. Good infrastructure is the key to fast development. Therefore, this should become the focus of the Indian government in the next five-10 years. I think that India has not yet shown to the world its real potential and value: they should look to the Chinese to learn how to advertise themselves.<<

Madhu Koneru, Executive Director, Trimex, UAE

        India has skilled, English-speaking labor at far cheaper rates than can be found anywhere else. Approximately 85 percent of its population is younger than 45, giving India vitality and forward momentum. To capitalize on this reality, particularly in high-tech and export zones, India must stay focused on increasing access to power and water. India’s strong legal system and low-cost, high-skill labor market offer investors further incentives.
India has seen heavy investment in sectors driven by consumer demand, which has primarily benefited large cities, as they already enjoy developed infrastructure. However, we need to look beyond India’s cities and target less-developed areas. To that end, industrial growth will require feasible infrastructure, power and water. The government has made building infrastructure a priority, meaning investment will flow into sectors like power and transportation, which are instrumental for developing growth.

Heinz Dollberg, Executive Vice President, Allianz, Germany
        China, in the past, has received significantly larger investments than India. While both China and India will continue to be preferred overseas investment destinations for multinationals, there is now a growing preference for India over China. An economic examination shows, that unlimited labour supply at low cost has been a major ingredient behind China’s economic success story in the past. However, perceptions are changing at the moment: social pressure is mounting in China to increase wages and to improve labour conditions in general. As a matter of fact, many Chinese companies have started to increase wages considerably, the same holds true for the state provinces. Without trying to quantify the impact of these measures, higher labour costs in China could make other countries with a similar export structure more competitive than China and lead to a shift in investors´ attention from China to other countries.

While both China and India are expected to maintain their high growth rates over the next decade, the sustainability of growth seems more certain in India. China now seems to have reached a stage where there has been substantial overinvestment in a number of sectors and huge excess capacity has been built up in the manufacturing sector. India, on the other hand, is still at the beginning of its investment cycle.

Tom Schick, Executive Vice President, American Express, USA
Over the last five years, India has emerged to become one of the top recipients of foreign direct investment (FDI). Major initiatives like industrial decontrol, liberalization of trade policy, full commitment to safeguarding intellectual property rights, financial sector reforms, and liberalization of exchange regulations, have provided a liberal, attractive, and investor friendly investment climate. These initiatives, combined with India’s robust domestic economic development, have helped make the country the world’s fourth largest economy in terms of Purchase Power Parity and the tenth most industrialized country in the world.

Tom Schick, Executive Vice President, American Express, USA - on the
next big driver for India’s growth story.
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