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business newsCIVETS Watch: "Soda Pop Indicator" Suggests Vietnam's Middle Class Is Growing Rapidly
By
Carol Kopp
Dec 14, 2011 8:40 am
Vietnam has problems, but by this measure its consumer economy still has some fizz.
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The figures are particularly impressive given the nation’s runaway inflation rate, and the government money-tightening policies that are intended to control it. Both reportedly have added great stress to the lives of many Vietnamese. The Business Monitor report notes that those curbs on consumer spending are offset by low unemployment and strength in the tourism industry.
“A massive youthful population, sector immaturity and a plethora of macroeconomic driving factors make the Vietnamese consumer goods sector a high growth perspective,” the report concludes.
The Vietnamese also are developing a taste for coffee. Masan Consumer, a leading producer of packaged foods, recently purchased a controlling interest in Vietnamese coffee company Vinacafe to increase its share of that local market. The private equity investment firm Kohlberg Kravis Roberts & Co. (KKR) bought a 10% stake in Masan Consumer in April, for $159 million.
Unfortunately, The Soda Pop Indicator won’t translate well to Egypt or anywhere else in the Middle East, at least in the near future. Alcohol sales figures won’t work either, obviously.
Yet, many of the same demographic factors are present in Vietnam and Egypt. Both have a startlingly youthful population that is better educated than previous generations and, thanks to the Internet, acutely aware of the outside world. Each has a rapidly growing middle class with big aspirations for themselves and their children.
But Egypt’s future is on hold for now, and the same may be true throughout North Africa and the Middle East, where the cascading movement called “the Arab Spring” has only just started.
Despite the immense potential in this region, Fortune argues, in an article called “Investing After the Arab Spring: Unfinished Business,” that only the most risk-tolerant investor should even dabble there in the near future.
In Egypt, nearly a year after the ouster of long-time dictator Hosni Mubarak, the political situation can hardly be called stable and the economy has seriously deteriorated. Free elections have finally begun, but the country won’t have a new leadership in place until mid-2012. It is by no means certain that an “American-style” democracy will be the result.
CIVETS Watch in Brief:
Chilean Bank Gets Colombian Partner
Grupo Santo Domingo, a Colombian conglomerate, will invest about $100 million to buy a 3% stake in Chile’s CorpBanca (BCA). The investment will give CorpBanca a local partner for its entrance into Colombian banking as the new owner of the Colombian assets of Spain’s Banco Santander SA (STD).
CorpBanca paid $1.2 billion for the Colombian assets of the cash-strapped Spanish bank earlier this month.
Grupo Santo Domingo has assets in a broad array of businesses, from television stations to beverage brands, but the investment in CorpBanca marks its return to the banking industry.
Smartphones Multiply in Indonesia
Cheaper mobile phones and data services will send Internet usage in Indonesia soaring over the next five years, according to a new report. Spending on Internet devices and access by consumers, business and government should grow to $35 billion in 2016, from about $12 billion this year, according to Deloitte Access Economics, an Australian provider of economic advisory services.
Indonesians are already enthusiastic users of the Internet, with a notable interest in social media. Of the nation’s 45 million Internet users, 40 million use Facebook, making it the biggest market outside of the U.S. for the social network. Smartphones brought the Internet to people who live far from the cities, where Internet cafes and broadband service is concentrated.
Indonesia’s Master Plan
The government of Indonesia has started 91 projects at a cost of more than $50 billion since May 2011, as it starts work on a gigantic master plan to improve the country’s business infrastructure. Another 73 projects will begin in 2012, a government minister told The Jakarta Globe.
The plan calls for development of 6 economic “corridors” along the Indonesian archipelago, with business and industrial activity centered around the potential and resources of each area. The government plans to contribute 10% of the total cost, with the rest coming from private companies.
Overall, the plan is designed to get the country to its goal of a gross domestic product of $4.5 trillion in 2025, from $702 billion last year. That would make Indonesia one of the world’s 10 biggest economies.
Turkish Economy Grew More Than Expected
The Turkish economy grew at an 8.2% rate in the third quarter, far above the expected 6.6% gain, despite the central government’s efforts to slow it down. Among the G20 nations, its growth rate was exceeded only by China.
The country’s 12-month current-account gap also climbed, to a record high. The central bank is attempting to slow the economy, engineering a “soft landing,” in order to bring down the current-account deficit, which has grown to about 10% of gross domestic product.
The government projects next year’s growth at only half this year’s overall rate, which is expected to come in at 8%. The drop is expected largely because of a slowdown in spending from the Euro zone, its largest trading partner.
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