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Energy Procedia 100 (2016) 475 – 479
3rd International Conference on Power and Energy Systems Engineering, CPESE 2016, 8-12
September 2016, Kitakyushu, Japan
Abstract
The Association of Southeast Asian Nations (ASEAN) has been considered as one of the attracting regions for foreign direct
investment. As developing nations are growing, they tend to consume more electricity and need more power generation, which
becomes one of attractive businesses in this region. However, not many studies focus on an assessment of business environment
of power generation and might deter unfamiliar investors from venture. Therefore, we assessed the relative attractiveness of
power generation investment in this region in five aspects: economy, business, risk, infrastructure, and finance, which were taken
up from the framework of the Global Infrastructure Investment Index. The assessment can provide an overview of strengths and
weaknesses of power generation investment and serve as guidelines for investment decisions and policy making to investors and
government in each ASEAN country.
© 2016
2016TheTheAuthors.
Authors.Published
Publishedby by Elsevier
Elsevier Ltd.Ltd.
This is an open access article under the CC BY-NC-ND license
Peer-review under responsibility of the organizing committee of CPESE 2016.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of CPESE 2016
Keywords: ASEAN; Business environment; Power generation investment
1. Introduction
The ASEAN, which comprises of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, and Vietnam, has been identified as one of the fastest developing regions in the
world, and by an establishment of the ASEAN Economic Community (AEC), a regional economic integration has
been strengthen and brought interests from foreign investors [1]. To support the region’s economy growth, the needs
for sustainable energy security have become significant and shall be considered when government makes policy [2]-
[4]. One of the important contributors that enhance the region’s energy security is a private investment, from both
domestic and abroad investors. To attract these investors, the region should develop solid guidelines that promote its
energy business. Therefore, this study deploys available data to assess attractiveness for power generation
investment in ASEAN countries through a quantitative method. The purpose of this work is to preliminarily screen
for attractive markets abroad of power generation. Country screening is commonly accepted as the first step in
analyzing foreign market entry [5].
1876-6102 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of CPESE 2016
doi:10.1016/j.egypro.2016.10.205
476 Siripha Junlakarn and Weerin Wangjiraniran / Energy Procedia 100 (2016) 475 – 479
Market attractiveness, as a term found in portfolio analysis and market strategy planning, describes market
growth and profit possibilities of an available market or industry; market attractiveness is affected by various factors.
According to a number of studies that have investigated the various factors of international expansion [5]-[10],
market potential, which depends on the market size, the market growth and the consumer purchasing power, is
identified as one powerful factor affecting the market attractiveness. In addition, McKinsey & Company suggests
that the most common factors affecting the market attractiveness are growth rate, market size, market profitability,
market structure, product life cycle changes, changes in demand, trend of prices, macro environment factors,
seasonality, availability of labor, market segmentation [11]. The attractiveness of foreign markets is also involved
with economic, political, legal, regulatory, cultural and geographic of that country [5], [9]-[10], [12]. However, key
factors that should be included to evaluate market attractiveness depend on company’s objectives of such evaluation
[11].
To preliminarily assess attractiveness of international market, there are two main complementary approaches:
country clustering and country ranking [5]. The former classifies countries in groups according to their similarity of
commercial, economic, political, and cultural dimensions, while the later ranks countries from their overall market
attractiveness, which is evaluated from different dimensions in respect to the considered market. The details of these
two methods have been discussed in [5], [13]. For this study, the method of country ranking is selected because we
aim to assess the relative attraction of ASEAN countries to power generation investors.
2. Methods
2.1. Framework
Since power generation business is relevant to infrastructure investment, this study assesses the attractiveness of
power generation market under the framework modified from that of the Global Infrastructure Investment Index
[14]. This framework focuses on the relative attraction in five aspects: economy, business, risk, infrastructure, and
finance. By considering this framework, we chose indicators related to power generation investment under each
aspect, and all indicators have the same weight in the assessment. However, due to limited data availability, we
selected only twenty indicators which are available for all ASEAN countries from different years (2010-2015), as
shown in Table 1. These indicators were used to assess an overall situation of power generation investment in the
ASEAN region.
The assessment was done by using secondary data from national statistics and open source data. We collected the
data set of each indicator, and then the data set was normalized on a linear scale of 1-5 as shown in (1).
ݔ െ ݊݅ܯ
ݔ ᇱ ൌ ͳ ሺͷ െ ͳሻ ൬ ൰ (1)
ݔܽܯ െ ݊݅ܯ
where, ݔ ᇱ is normalized value based on 1-5 scale. ݔ is value of the original data set ܺ ൌ ሾݔଵ ǥ ݔ ሿ. ݊݅ܯ and
ݔܽܯ are minimum and maximum value/scale of that original data set ܺ, respectively.
On the other hand, if indicators, such as variation of inflation, difficulty to get electricity, or tax rate, are
inversely related with the scale, the reverse normalization can be calculated as shown in (2).
ݔ െ ݔܽܯ
ݔ ᇱ ൌ ͳ ሺͷ െ ͳሻ ൬ ൰ (2)
݊݅ܯ െ ݔܽܯ
When
W considerring all five aspects, Singapo ore, Malaysia and Thailand are the top thhree countries whose market is
attractive for powwer generation investment am mong other A ASEAN countrries as shown in Fig. 1. Sinngapore’s market
envirronments are fully develo oped as it has the open business env vironment, reelatively low risks, available
infraastructure andd strong finan ncial sector. The strengthss of Malaysia are the maature infrastruucture, low risk r
envirronment and ease of doing g business. Th he strong poinnts of Thailan nd in attractinng investors arre the electriccity
infraastructure, andd financial envvironment.
The bottom threee countries whose
w market is i in the initiall states are My
yanmar, Cambbodia and Viettnam. The stro ong
point of these threee country is their econom my. However, since Myanm mar has just reecently openedd its businesss to
privaate sectors annd foreign inv vestors, it stilll lacks fundam mental environments to nuurture businesss growth. Quick
goveernment reform ms and policcymaking thatt create frienndly business environment should stimuulate its coun ntry
deveelopment. Cam mbodia has weeakness in its infrastructure
i ffrom low goveernment invesstment in the ssubject. Howev ver,
the inland
i countryy is likely to develop its in nfrastructure rrelatively conv venient than i sland counterrpart. Vietnam m is
relatively risky onn variation of inflation,
i whicch results from m the rapid gro owth of countrry economy. H Heighten contrrols
on fiiscal and moneetary policy, combining
c witth diversificatiion of other in ndustries and llarger econommy should contain
the effect
e of unstabble inflation.
All
A these threee countries have
h potentiall to grow in generation bu
usiness; howeever, key chaallenges for th hese
relatively weak coountries shoulld be addressed. Investors m
may focus on the strengths aand be aware oof the weaknessses
wheen making investment decisiion.
4. Conclusions
C
Due
D to the avaailability of data d on ASEA AN countries, w we selected twwenty indicatoors to assess attractiveness for
powwer generationn investment. WithW the limittation of data aaccess, the twwenty indicatorrs, which can be acquired frrom
the reliable and reegularly updatted data sources, are sufficieent to provide an overview of strengths annd weaknesses of
powwer generationn investment to o investors and d government.. The results of
o the assessm ment can be serrved as guideliines
for investment ddecisions and policy makin ng. Notably, tthe assessmen nt can be impproved to be sophisticated d by
considering an im mpact of indicaators on investtment decisionn. For instancee, if levelized ccost of electriccity, which is one
of significant facttors, is includeed in the assessment with a hhigh weight, the results of aassessment willl change.
Each
E country in the region n faces some challenges off its own. Thee common chhallenges are in the aspectss of
busiiness, econom my and financee. To foster thee attractivenesss for power generation
g invvestment in thee region, ASE EAN
coopperation may come useful in i addressing key concernss such as ease of doing busiiness and legaal framework and
deveeloping comm mon guidelinees for govern nments. In adddition, economic environnment could be improved by
integrating more m mature and less mature marrket together tthrough transm mission system ms such as ASEAN Power Grid G
projjects [1]. The iintegrated marrket with less restricted movvement of money in the reggion can also ffacilitate variattion
of financial
fi servicces.
Ack
knowledgemeents
This
T research was funded by
b the Ratchad
dapisek Somppoch Endowm
ment Fund (20 16), Chulalonngkorn Univerrsity
(CU
U-59-080-AD)).
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