LONDON (ICIS)--?xml:namespace>Asia as a whole is currently not showing the momentum that might be expected, Martin Brudermuller, the vice chairman of BASF's executive board, said on Thursday.
“The region is becoming more vulnerable,” Brudermuller said in an interview with German daily Frankfurter Allgemeine Zeitung. BASF provided a transcript.
Brudermuller pointed in particular to India, but also to China.
“India is recording growth but the market is feeling the effects of home-grown problems, such as the backlog of reforms and the caution of foreign investors in reaction to questionable legislation,” he said.
“The political paralysis [in India] in certain areas does hold things up, and it’s sad to see how the country is currently falling short of its potential,” Brudermuller said.
As for China, Brudermuller noted a “certain amount of unease” ahead of the upcoming transition in the heads of state and government in that country later this year.
“The struggle over China’s future direction seems to be harder fought than we had imagined,” he said.
There are very intensive discussions being held in China about the direction the country should take, Brudermuller said.
“For investors, the times when a project was unanimously rubber-stamped by politicians are over,” he said.
“Businesses are also increasingly having to face up to public scrutiny, which I welcome,” he added.
“Personally, I’m convinced that China is now so firmly anchored in the global economy that it must remain on the path towards greater openness,” he said.
Meanwhile, the eurozone sovereign debt crisis is also having an impact on Asia, making it even more important for European leaders to stabilise the situation as soon as possible, Brudermuller said.
BASF’s sales in the Asia-Pacific region fell by 5% year on year in the first three months of the year, albeit in comparison with an exceptionally strong first quarter in 2011, Brudermuller said.
However, south-east Asian countries continue to perform well, he said.
Indonesia alone, with its 240m people, is averaging stable growth of more than 5% per year.
Meanwhile, Malaysia could become an even stronger export base, Vietnam is gaining in stature through its manufacture of shoes, textiles and printers, and Thailand is becoming increasingly important for international automotive and electronics value chains, Brudermuller said. “We will also need to look more closely at Myanmar in the next few years, for example in the field of crop protection and the expansion of labour-intensive manufacturing,” he added.