When FinanceAsia.com began covering the Asian financial markets 10 years ago, Southeast Asia was still grappling with the fall-out from the Asian Financial Crisis. But 10 years later, after the most serious global financial crisis in a generation, the outlook for Southeast Asia is brighter than at any time in my career.
Take Indonesia for example, Southeast Asia's biggest economy and the place where I joined Credit Suisse in 1998. Few countries were as profoundly affected by the Asian crisis as it was, but Indonesia today is a global emerging markets star. We forecast that real gross domestic product (GDP) growth will average 5.6% per year from 2010 to 2014 and 6.5% per year from 2015 to 2019. Credit Suisse's analysts also believe that per capita income will almost triple to approximately $7,000 by 2019 from $2,300 in 2009.
Not surprisingly, international investors are more eager than ever to gain exposure to Indonesia, seeing a large and stable democracy, a young population, highly respected financial policymakers with a reforming agenda, and an economy driven by domestic demand and net exports of commodities. It has been a truly remarkable turnaround.
Indeed, Southeast Asia as a whole has staged a strong recovery from the events of 1997-98 and demonstrated great resilience through the recent crisis. There is now a much greater degree of fiscal discipline in Southeast Asia, which underpins the region's strong economic prospects. Indonesia, for example, has reduced gross general government debt as a percentage of GDP from 66.6% in 2003 to an expected 30.5% in 2009, while the Philippines has reduced the same measure from 77.7% to 58.5% over the same period. What is more, many large industrial assets in the region are still held by the state through national investment in key industries, which gives these governments further fiscal flexibility.
Greater trade liberalisation and more investor-friendly regulations have also helped create more durable prosperity. And I believe the concept of Asean [Association of Southeast Asian Nations] as a co-ordinating body in Southeast Asia has gained a great deal of traction since the Asian financial crisis. It is now common to hear corporate leaders talking about an Asean strategy, or investors discussing Asean stocks.
Although Asean is made up of a diverse group of countries, the region is distinctive for its shared cultural and ethnic links, and during the past decade we have seen a strengthening of the financial and trade ties between Asean countries. For instance, we have seen an increasing intra-Asean share of trade and investment as regional corporates have developed regional production networks, leveraged country strengths and increased pan-regional business interests.
This dynamic has been particularly striking in sectors such as consumer products, financial services, infrastructure, telecoms and, of course, natural resources, of which Southeast Asia is blessed with an abundance. And Asean's young, increasingly prosperous and largely well-educated population of 600 million positions the region strongly for consumer-led growth in the coming decades.
It was clear in the aftermath of the Asian crisis that the region needed to develop its domestic capital markets to reduce its reliance on external financing. At the end of 1996, the total value of outstanding local currency bonds in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam was $159 billion. By the end of 2009, this had reached $685 billion. Thailand's bond market alone was almost 10 times its pre-Asian crisis size. That is what you call progress.
Efforts to increase the size and liquidity of domestic capital markets have not been restricted to debt securities either. The Kuala Lumpur bourse, for example, was able to boost its capitalisation and turnover through the $3.3 billion initial public offering by Maxis last year, for which Credit Suisse was a global co-ordinator.
Regulators in other Asean countries are also working hard to attract new listings to their exchanges to build on the rapid growth of regional equity markets over the last 10 years. During what has been a poor decade for global equity performance, the market capitalisation of the Indonesia Stock Exchange in US dollar terms has increased by more than 300%, that of Bangkok by more than 170%, that of the Singapore Exchange by more than 80%, the Kuala Lumpur Stock Exchange main board by 112% and the Philippines Stock Exchange by nearly 200%. Since January 2005 alone, the US dollar market value of the Ho Chi Minh Exchange has increased from just $255 million to $30 billion -- or by more than 11,000%.
While much has been done to make Southeast Asia a more attractive destination for portfolio investors, there remains plenty of scope for further progress. The new listings that regional bourses are striving to attract are vital for improving liquidity and making these markets easier to trade for international asset managers. And an even broader universe of investors will be attracted to different asset classes in the region if efforts continue to strengthen corporate governance standards and investor protection measures.
We have stood by our clients in Southeast Asia during the past 10 years, even during the most difficult times, and our commitment to the region is unchanged. I have spent most of my career here and have seen the attention that was paid to the rapid growth of Southeast Asia in the 1990s and the subsequent preoccupation with the emergence of China and India. The fact that the world is once again focussing on Southeast Asia comes as no surprise. I believe that Southeast Asia can grow from strength to strength in the next decade and beyond, and what is more, I'm sure FinanceAsia will be there to report on it.
Helman Sitohang is co-head of investment banking and co-head of the global markets solutions group for Asia-Pacific at Credit Suisse.