YOU ARE HERE: LAT HomeCollections

Asia: An Emerging Center of World Commerce : Pacific Rim: A huge consumer market is developing. The new trend is exchange and investment among the countries themselves, leaving the U.S. behind Japan and Taiwan in capitalizing on opportunities. : TRADE BOOM: The Rise of Intra-Asia Commerce


BANGKOK, Thailand — Foreign investment, once considered a Trojan horse of neocolonialism, is changing the economic map of Asia.

Asian countries that once erected stiff barriers to foreign investment in manufacturing are now fighting one another to get it. And nations that once were the targets of foreign investment themselves have suddenly become leading providers of it.

The upshot is a major expansion of Asia's industrial base that promises to bring the region through the Persian Gulf War less scathed than the rest of the world.

The wave of investment is also giving the leader--Japan--still more clout and creating influence for new investors, especially Taiwan.

The old top investor--the United States--is in retreat. American diplomats and executives warn that U.S. businesses are failing to take advantage of new growth in one Asian nation after another.

Most of all, Japan and Taiwan are taking advantage of the newly developing markets and changing trade flows.

A new "megamarket" for consumer and industrial products will emerge in the coming 10 years in South Korea, Taiwan, Hong Kong, Singapore, Thailand, Indonesia and Malaysia, Kenneth S. Courtis, senior economist for Deutsche Bank Capital Markets, predicted recently in Tokyo. Japanese investments in these countries, he said, ensure that Japan will be in the best position to take advantage of their booming growth.

Donald Gregg, U.S. ambassador to South Korea, said in an interview in Seoul that he fears that the United States will let the opportunities slip by and fail to gain economic benefits in Asia commensurate with the cost of providing security to the region.

Bob Martin, managing director of Colgate-Palmolive (Thailand) and former president of the American Chamber of Commerce in Bangkok, thinks that the United States is losing out to Japan because of a difference in strategies.

"Japan's strategy is economic-driven. It affects how they structure their organizations and how they train their people--all based on that single preoccupation. The United States hasn't articulated a strategy. . . . The United States has to develop a vision if it wants to compete," he said.

Indeed, despite a huge reservoir of American investment from earlier years that is continuing to grow, the United States is no longer sure of even second place in investment in Asia.

Taiwan appears to have emerged as No. 2, overshadowing the United States in the Philippines, Thailand, China and Indonesia. In Malaysia, Taiwan has shot past the United States and Japan. Even tiny Hong Kong has outstripped new U.S. investors in China and Thailand. And in 1989, South Korea ranked second to Japan in Indonesia.

Southeast Asia has taken over from Northeast Asia as the world's fastest-growing region--the home of the newest of the newly industrializing countries that are expected to challenge such European countries as England and France in the size of their economies by the turn of the century.

As a result, economists are predicting that an entirely new world power center is about to appear.

Northeast Asia is gaining, too, however. The manufacturing base of Japan, South Korea and Taiwan continues to grow as firms in all three countries move less sophisticated production offshore and turn their factories toward value-added goods.

Many goods that once flowed directly from Northeast Asia to the United States now come from Southeast Asian factories owned by Japanese, South Koreans and Taiwanese.

As a result, American trade deficits with Southeast Asia are rising even as longstanding American bilateral trade deficits with the three Northeast Asian nations are declining significantly.

In contrast, Japan's trade surpluses, which are dwindling with the United States and the rest of the world, are getting a major boost in every Asian country except oil-producing Indonesia.

Not only the Japanese but other Asians as well are sending Japanese machinery to their new factories in Southeast Asia.

The Japan Foreign Trade Council predicts that Japan will send more of its exports to Southeast Asia this year than to the United States--a historic change.

Taiwan is following suit. Bolstered by shipments of machinery, parts and raw materials to its new plants in Southeast Asia, Taiwan for the first nine months last year recorded a bigger surplus in trade with Southeast Asia ($7.1 billion) than with the United States ($7 billion). That, too, was unprecedented.

Equally significant, Taiwan's $6 billion in exports to Hong Kong (mainly for China, another major target of Taiwan investment) nearly equaled its sales to Japan ($6.09 billion) in the same period.

But Japan, in turn, is buying more from Southeast Asia.

"Within three to four years, Japan will become Thailand's biggest market," replacing the United States, predicted Hisahiko Okazaki, Japan's ambassador to Bangkok. "By 1995, Japan will be the biggest market for all of Southeast Asia."

Los Angeles Times Articles