Ask anyone why they invest in Southeast Asia (and we did) and they will give the same simple answer - that it has one of the most attractive demographics. At the most basic level, ASEAN represents 8.4% of the world’s population. Its 671.7 million people make it the third-most populous region and, by default, a key market for the chemical industry.

ASEAN is emerging as a prominent FDI destination both because it is in the middle of APAC, indirectly benefiting from a rising Asian-centric consumer and manufacturing hub, and for its own merits as a rising growth engine: As a bloc, ASEAN is expected to rise from fifth to the fourth largest economy in the world by 2030. Singapore, one of the Four Asian tigers (alongside Hong Kong, South Korea, and Taiwan) is a magnet for FDI investment, especially in high-tech and R&D-heavy sectors. Meanwhile, the so-called “tiger cubs,” the developing economies of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam (known also as the Emerging 5), have the strongest growth outlook to 2030 among major regional groupings.

China’s world factory is not easily replaceable and few are those who try to. However, to protect themselves from the perverse effects of protectionist measures across the US-Chinese orbit, the manufacturing sector has started to diversify from its reliance on China, replacing the “made in China” strategy with “made around China,” in a twinning model where Indonesia, Malaysia, the Philippines, Thailand, and Vietnam emerge as ideal twinning destinations.

Across the hydrocarbon value chain, the chemical industry is doing some of the hardest market calculations it has done in years – possibly ever – as demand, supply, and everything that links the two in the convoluted global value chain has not followed any “normal” pattern since the start of the pandemic.

At the midstream, the Southeast Asian petrochemical industry is to see ferociously more competition, both at home and in its primary export market, China, as demand remains languid and supply is strong, particularly from the Middle East. Southeast Asia is not only a feedstock net importer but also export-focused, a dangerous combination of dependencies that weakens its grip on the market. To make matters worse, most of the local crackers are naphtha-based, subjecting the industry to oil price volatility. More feedstock could become available though, after a flurry of major discoveries in the region lit up investors’ interest, driving exploration and development work in oil and gas projects.

Further downstream, the specialty chemicals producers is starting to get much closer to the end-consumer. Performance chemical and ingredient suppliers are now routinely co-designing with their customers end-products in a trend that has been described “chemistry as a service.”

In an era of low-priced commodities and an uncertain geopolitical landscape, logistics companies are prioritizing the long-haul business, not just because it is probably the most profitable, but also because their customers are searching for new markets out to sea.