EMPEA Insight: Southeast Asia

During 2007 and 2008, the private equity industry in the Southeast Asia region seemed to recover from the collapse of private equity there following the late 1990s fi nancial crisis. Despite residual concerns about political instability and corruption, and worries that fallout from the US recession will worsen a slide in exports, the investment thesis for the region remains strong. Young and growing populations are rapidly developing consumer habits; resource-rich economies like Indonesia stand to gain from commodity price gains and rising energy needs; trade relationships within the region and with other Asian partners are strengthening; and governments in the region continue to make progress, albeit sometimes slow, toward economic reforms.

Capital dedicated to private equity investment in the region has doubled over the last eight years, rising from US$520 million in 2001 to US$982 million in 2008, after reaching a zenith in the 1990s. Between 2005 and 2008, the total value of private equity investment in Southeast Asia nearly quadrupled, increasing from US$1.3 billion to US$5 billion through December 2008. Activity within the region has been led by Singapore and Malaysia (primarily due to the prevalence of larger buyout transactions within those markets), followed close behind by up-and-coming Indonesia, the largest single market representing 40% of the population and one-third of GDP among ASEAN countries.

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