Promising future

Services will account for bigger share of GDP soon, experts say

Services will make up about half of the economic output of developing Asia this year, driven in part by the growth of the sector in China.

Donghyun Park, principal economist at the Asian Development Bank, says services will account for about half the GDP across the region this year, up from 48.5 percent in 2010. In Latin America and developing Europe, services account for about 60 percent of the economy. In the US and most other advanced economies, services account for 75 percent of GDP.

The growth is partly associated to the growing links between the various countries in the region. These links have been in the spotlight over the past weeks during a series of events that brought together leaders from around the world.

The Asia Pacific Economic Co-operation summit that was held in Bali on Oct 5 brought together leaders from 21 different countries to consider topics such as dropping customs barriers. According to the World Trade Organization, a burst of protectionism that started after the global financial crisis is starting to fade away around the globe. In the six months to May, 52 new measures to facilitate trade were adopted around the world, mostly lowering tariffs.

Not far away from the APEC summit, in Brunei, the 23rd ASEAN summit opened on Oct 9. The summit included the leaders from the 10 ASEAN members along with their counterparts from China, Japan, South Korea and trade delegations from the US, Russia and India. The trade in services was at the top of the agenda, even if there are some fundamental differences among the various members.

The week after, WTO members met in Bali for an informal meeting aimed at pushing the stalled Doha Round of negotiations forward. A more formal meeting is set for December and there is some (small) hope of movement.

This year, services will account for about half of the economic output of economies in ASEAN for the first time. More service providers such as law firms and accountancy firms are increasing their presence in the region, the Asian Development Bank says.

Global firms expect the trade in services in the region to grow, if for no other region, because economic growth is visible and the base of services is low in some countries.

KPMG, the international accounting and consulting firm, was the first to set up an office in Myanmar and gained from its first mover status there. The firm is rapidly expanding operations in Asia.

The firm's international chairman, Michael Andrew, took the post in 2011. He decided at the time to set up his office in Hong Kong, where the firm has a large presence because he looks at emerging markets, particularly those in Asia, as key to the growth of the services-oriented firm, he said in an interview in July.

"This is where our future is and getting it right in these markets is critical to our success in 10 or 20 years time," he said.

For China Daily

(China Daily Africa Weekly 10/25/2013 page7)