South-east Asia’s stodgy conglomerates are holding it back

FEW parts of the global economy hold more obvious promise than South-East Asia. Multinational firms hoping to move manufacturing away from China are racing to establish supply chains in the region. Indonesia, the Philippines and Vietnam are expected to be among the fastest-growing economies in the world during the rest of the decade. Malaysia is likely to join the ranks of the world’s high-income economies soon. Singapore’s importance as a financial hub has grown as foreigners have deserted Hong Kong.

But when it comes to home-grown businesses, the picture in South-east Asia is murkier. The market value of investible stocks in Indonesia, Malaysia, the Philippines, Singapore and Thailand is around US$900 billion. Those five economies have roughly the same gross domestic product as India but less than half its investible market value. Seven American companies are each worth more than the entire South-east Asian market.

Among the top 50 firms in South-East Asia by revenue, only one – Sea, a Singaporean gaming and e-commerce firm – was founded in this century. State-owned enterprises account for 15 of the top 50. Subsidiaries of the region’s tentacular conglomerates account for 14.