Vietnam and the Philippines are set to reap the rewards of diversifying their exports, helping fireproof the two economies from plunging commodity prices. Indonesia and Malaysia's failure to do so now represents a risk to Asia's 2016 outlook.
Two decades ago, commodities were about 50 percent of overseas shipments for both Vietnam and Indonesia . By 2014, Vietnam had cut that to less than 30 percent while Indonesia's was almost 60 percent. In the Philippines, a net commodity importer, the ratio was about 20 percent last year.
Vietnam managed to reduce its commodity export dependence by boosting sales of electronics, mobile phones, textiles and footwear via a broader manufacturing base.
Global commodity prices from oil to copper to coal have declined as demand from China wanes in response to an economic slowdown. The intensifying El Nino weather pattern could also result in the prices of natural gas and oil staying weak -- due to warmer winters in North America -- putting renewed pressure on Malaysia's and Indonesia's exports, HSBC Holdings Plc. said.
"The commodity environment is going to drag on growth through 2016 ," HSBC economists led by Joseph Incalcaterra said in a Sept. 30 research report. "The Philippines should benefit the most, while Vietnam seems to be holding up well given the lack of crop disruptions. We continue to see the highest risks to Indonesia, where the effect on the real economy and consumption has yet to be fully felt.''
Gross domestic product in Vietnam and the Philippines will expand by more than 6 percent this year and next, the fastest among major economies in Southeast Asia, the Asian Development Bank forecast last month. Indonesia's economy will probably grow 5.4 percent in 2016, while Malaysia's economy is seen expanding 4.9 percent.
Vietnam's GDP per capita was $2,052 in 2014, compared with Indonesia's $3,492, according to World Bank data.