Central Asia: Investing in the New Frontier

Investing in emerging markets has been a popular business choice for years now, with a different part of the world being dubbed a veritable ‘goldmine’ for foreign investors year on year.

But how do you ensure that your investment is well placed? Of course, there are never any guarantees, but doing your homework and making decisions based on facts and statistics, as opposed to a hunch, is a very good start.

This type of informed investment decision is why Central Asia is such an attractive opportunity for the frontier investor. Experts are convinced that the untapped markets of this region are ripe for investment, but it’s not just their opinions that are impressive – the statistics are too. Of all the emerging markets on the planet, Central Asia is a foreign investor’s dream and everything written about the area, and the studies already undertaken, reiterate this notion.

Take the region’s financial system, for example – this part of the world boasts some of this century’s fastest-growing economies and combined with staggering reserves of natural resources, it’s no wonder foreign investors are falling over themselves to get a piece of the action. There are three reasons why Central Asia’s capital markets are perfect for investment.

· They’re under developed

· They’re under researched

· They’re low cost

The area is underdeveloped when compared to other emerging markets, meaning investors can build a legacy in an area of relative infancy. Apart from the research quoted in this article, there has been very little digging done into the potential for investment in Central Asia. This means that in investment terms, it’s one of the globe’s best-kept secrets. Finally, the area still boasts inexpensive resources and therefore any investment project can be completed while being easy on your pocket.

When it comes to property, the mantra is ‘location, location, location’ and it could be said that investment is no different. The central part of Asia enjoys a strategic position between two phenomenally large economies in China and India. As these grow, so will the demand for Central Asia’s natural resources – and with that follows unique investment opportunities. 1.2 billion people live in India, while China has a population of 1.3 billion. India is the fifth largest oil importer in the world, while China is the third and they boast $4.1 and $10.1 trillion GDPs respectively, meaning the area has two significant markets next door.

Central Asia is packed with countries that are perfect for foreign investors and the area represents a significant opportunity for those with the funds. Turkmenistan, for example, has discovered gas fields with the ability to supply the UK for at least 20 years, Kazakhstan boasts 99 of the Periodic Table’s 110 elements in mined and mineable reserves, and Uzbekistan holds the fourth largest reserves of gold in the world.

Central Asia is an investment based on fact not fiction, statistics not sixth sense and potential not promises. With its significant natural resources, new markets and economic growth, now is the time to invest in this profitable region- can you really afford to miss this opportunity?

The Demand for Serviced Apartments in Hong Kong

Developed countries in the world may be in an economic recession, but Asia is not. Countries like India and China are leading from the front and investors from all over the globe are flocking to Asia. Hong Kong is a busy and lively place and is overflowing with tourists all throughout the year. Multinational companies are shifting their staff to Asian countries, and Hong Kong has seen a heavy inflow of expats in the first half of 2011. The growth opportunities are there in Hong Kong and every multinational company knows that. Asia, today, means to investors what El-Dorado meant to gold prospectors many years back.

Hong Kong’s apartments are almost fully occupied all around the year and tourists have to book in advance to avail of discounted rates. The serviced apartment off take is quick and companies generally enter into long-term contracts with owners. Hong Kong is also the preferred destination for business men who visit mainland China. The expats and business executives who visit Hong Kong on work or business prefer to stay in serviced apartments because they would not like to get into long-term commitments.

The apartments come fully loaded and that makes them the preferred choice of tourists and expats. There are studios, 1-bedroom and 2-bedroom apartments and suites. Each apartment is well-stocked. The furnishings are top-class and the maintenance is professional. Most of these apartments are even equipped with air purifiers and green energy equipment like solar heaters, water-saving taps. The maintenance staff uses environment-friendly, biodegradable material in most of the apartments. Some apartments even allow dogs.

The apartments are just right for business executives on long stays, families on a budget, and for individual vacationers who want to stay in a home-like environment that’s affordable. There are all types of serviced apartments here – some cater to the multinationals, some are ideal for people on a budget, etc. The biggest advantage is that even the middle-rung serviced apartments are far more luxurious and convenient than hotel rooms.

All serviced apartments come equipped with modern kitchens that contain modern kitchen appliances, washrooms with showers, sinks, and more, access to public transport, Wi-Fi Internet, and housekeeping services. It is the kitchen in these serviced apartments that saves you a whole lot of cash. Plus, restaurant food is expensive and greasy.

If you want to live in the middle of excitement, noise and crowds, then you must book a serviced apartment in the Central District or in Lan Kwai Fong. These are the areas where all the action is. If you’re looking for peace and quiet, then look for options that are way from these hotspots. Ensure that you choose a Hong Kong apartment based on your lifestyle. However, do not rush to book a serviced apartment. Take your time and compare many serviced apartments in different Hong Kong localities before booking one. But, do all your checking in advance because these apartments fill up fast.

Perspectives and Potential of Asia’s Hotspots – China and Philippines in Focus

Global IT spend is expected to increase at a faster rate post 2009 as several service buyer markets unentangle themselves from recession. Growth may still be tepid but nonetheless more significant than the previous 3 years.

Post recession clients are more aligned towards offshore benefits.

Drivers for Technology Spend:

• Cost reduction as clients look for demand recovery
• Growth in competition leading to need for scalable, optimized and effective operations
• Diversification of business and expansion into new markets is pushing clients for innovation and faster time to market
• Growing SMB participation as service buyer (currently at 33% of total spend) globally

How suppliers can exploit growth in IT spend?

There remain opportunities for outsourcers, as offshoring spend remains relatively small

• Identification of new delivery and engagement models
• Overhauling of existing resources/ network to offer higher value
• Foster innovation/ IP/ assets- must for gaining edge over competition
• Develop ready to deploy platforms / frameworks for multiple geographies in order to enable faster time to market

The demand side is still composed of two regions of the globe- North America and Western Europe, which together contribute about 55% of global IT/ BPO spend. Offshore revenue share is 75%. But domestic markets from BRIC nations will also become increasingly important players in the near term.

The supply side will stretch across geographies and begin accelerating the pace of competition. Countries in S. America such as Argentina, Chile, Colombia, Uruguay, etc. are some which will be vying to supply clients, particularly the Hispanic population in US.

The incumbent Indian providers will continue to build delivery centers in key delivery regions such as Latin America, Eastern Europe and China.

Game changing strategies on supply side:

• Vendors positioning themselves as End to End service providers rather than cost saviors to increase wallet share

• Increased vendor consolidation and diversification (eg. Dell acquired Perot Systems, Product vendors expanding services portfolio etc)

• Building capabilities around RIM/ IO* and platform based BPO services (Service lines witnessing traction from client side)

• Vendors entering new regions to support existing client’s localization needs (deepens client reach and wallet share)

Strong Domestic and Regional Markets –

There is strong market potential in Asia Pacific region as evidenced by robust growth rates of regional domestic economies. Apart from India and China, smaller countries like Philippines and Vietnam, which are seen as supply side components, have strong domestic consumption potential, as evidenced by their strong growth rates on the back of increased domestic consumption.

• Healthy growth in IT spend provides tremendous scale for growth in these markets
• Current outsourced market for the region is over US$22 billion – primarily served by local & regional vendors
• Technology spend by government, BFSI, telecommunication and manufacturing will drive the growth
• International and regional vendors serving these markets have witnessed double digit growth

Service Delivery Cluster-

In the past 10 years, the service delivery cluster in Asia (earlier composed primarily of India, Sri Lanka and Philippines) has evolved to a circle of multiple nations providing a multitude of services and catering to a diverse group of markets and verticals.

For this cluster to further expand, and further clusters will emerge across the globe. Each service cluster will develop its own niche and market development segment. These clusters will lead to growth of the region as a whole.

Top Cities in Asia

Continuous demand has led to proliferation of outsourcing locations in Asia.

• Indian cities continue to lead the pack, followed by Philippines and China catering to both global and domestic requirements. Many, particularly in China are looking at catering to the domestic market instead of the global requirements.

• Manila NCR, after Indian cities like Bangalore and Delhi, has been consistently making it to the top of the outsourcing cities lists.

• China follows India in terms of most number of cities on the lists. Dalian has been consistently moving up rankings.

• Several cities moving down the rankings are also an indication of strong competition among the cities. This also indicates the aggressiveness of cities in promoting themselves as locations of choice.

• Most of the emerging Tier II/III cities are from Southeast Asia- from Philippines, Indonesia, Thailand and Malaysia. This could be mostly due to initiatives undertaken like by the Business Processing Association of Philippines (BPAC)