Banking On ASEAN 's Growth The Association of Southeast Asian Nations (ASEAN )'s drive to establish an ASEAN Community by 2015 is expected to support economic growth for Cambodia, Myanmar and Laos through increased trade and foreign direct investment. ASEAN 's growing political influence within the international community will also put the group in a stronger position to negotiate for favourable trade agreements with external parties, in our view. However, we see cooling external demand as a credible threat to the group's exports, which could become a significant drag on growth in 2011. Thus, we are forecasting relatively weak real GDP growth of 3.7%, 4.0% and 6.5% for Cambodia, Myanmar and Laos respectively in 2011. T he increasing scale and frequency of land rights violations are fuelling growing dissent against the Cambodian government. We are increasingly concerned with the government's failure to clamp down on corruption at the district level, which risks further social unrest going forward. The growing number of cases involving violations of land rights and forced displacement of the rural poor in Cambodia are partly a result of the Cambodian parliament's decision to pass a law allowing the government to expropriate land for development in December 2009. Despite ongoing efforts by the government to clamp down on corruption, Cambodia remains one of the most corrupt countries in the Asia-Pacific region. F oreign direct investment in Laos's mining industry could overtake the hydropower sector in terms of growth over the coming years. The country is well placed to capitalise on its rich mineral resources on the back of China's growing demand for industrial metals. We believe the Lao government's plan to issue new investment licences over the coming months will help raise foreign participation in the mining industry. Foreign capital and technological know-how will play a crucial role in paving the way for a new phase of growth for the industry, in our view. Growth in the mining sector will also contribute to Laos's Millennium Development Goals in the coming years. The Burmese government's 10-year plan for the development of a large-scale industrial estate in Dawei is attracting the attention of investors across the border. The Thai government's economic think-tank has warned that heavy industry in Thailand could shift operations from the Map Ta Phut industrial estate to Myanmar upon completion of the Dawei industrial project. However, uncertainties with the successful implementation of the project compel us to adopt a cautious stance on Myanmar's economic growth outlook in the coming years. Accordingly, we are maintaining our real GDP growth forecasts for Myanmar to average 4.0% over the next five years (2011-2016).
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