According to the second annual PricewaterhouseCoopers (PwC) Emerging Market 20 Index (June 2008 - http://www.pwc.co.uk/pdf/EM20_2008_report.pdf), the BRIC countries (Brazil, Russia, India and China) continue to offer good opportunities for investment. However, the results of PwC’s innovative country risk and reward model also points to a range of other locations as alternatives, reported Vietnam News in late August 2008.  Below are summaries of portions of the report that reflect countries on countries in the Asia region.

• Among the countries on the Manufacturing Index, India was the highest, at the 4th spot. The report explained that India "has traced a gently rising course in the Manufacturing Index since 2004, when it was ranked ninth. Though growing strongly, India’s GDP per capita remains relatively low due to the country’s fast-growing population – a factor which ensures that low-cost labour is widely available. This also suggests that India is likely to maintain a high position in the Manufacturing Index for some years. By 2038 (the end of the Model’s 30-year time frame) India’s GDP per capita is still expected to be less than 10% of the average GDP per capita of the developed world, whereas China’s will be almost 25% of that level. But a continued high ranking in the Manufacturing Index depends on India maintaining recent openness to trade and investment and improving its transport and energy infrastructure, as well as its average education levels."  In addition, sufficiency of water is a major longterm issue in both China and India.
  

• Based on an Index Value of 85, Vietnam’s 5th ranking for manufacturing investments is down from its pole position in 2007.  In 2008, the rate of investment attraction to Vietnam is lower than the year before but Vietnam still obtained high ranking for manufacturing. The report explained that, "Vietnam is highly competitive from a cost perspective, and offers investors sufficiently high potential returns that offset a relatively high country risk.'  This assesment is supported by the FDI figures for Vietnam through the first eight months of the year which are considerably higher than in 2007 and have held up strongly even with much concern about inflation in Vietnam and the long term prospects for real estate and the stock market.
  

• Thailand was ranked 11th with an index value of 82

• Malaysia was ranked 13th with an index value of 81

• China was ranked 14th.  Despite being a lucrative investment location, China did not break the top 10. Given the massive amounts of manufacturing-based foreign direct investment (FDI), its 14th place may even seem counterintuitive to some. It is worth noting, however, that as the incomes of Chinese workers rise, they will become more avid consumers for service providers such as retailers and hoteliers in the coming years.  The report explained that, "the main reason why China trails countries such as India and Vietnam is that the EM20 risk-reward index is a ratio measure which does not take into account the absolute size of a country’s market. If a company was looking to develop a very large-scale manufacturing facility, the labour capacity and physical infrastructure required would arguably rule out some of the countries at the top of the Manufacturing Index and would increase China’s relative attractiveness."  The rankings apply only to direct investment, not to investment in equity markets or other financial assets

• Cambodia did not quality for inclusion in the top 20 because of the small size of its current manufacturing base, but it was identified as a promising investment destination due to the wide availability of low-cost labour and a falling country risk premium.  The report explained that, "In terms of location, it also benefits from relative proximity to the West Coast of the U.S. ..... For the purposes of this Model it is considered essential for countries to have a reasonable manufacturing base, so that inward investors have access to an adequate pool of suppliers. It follows that, as Cambodia’s manufacturing base increases in size, it will likely become a strong contender for a high place in future Manufacturing Indices."
  

Although countries like Viet Nam and Cambodia still have relatively small economies, their low-cost bases can sometimes offer higher profit margins to manufacturers.  Runckel & Associates therefore supports the above rankings on both countries and believes that both countries can be a good low-cost option for manufacturing of certain products.  Vietnam is already getting a lot of attention from countries looking for a manufacturing base.  Cambodia deserves more attention and more investment in manufacturing than it is receiving at the moment.

Rank	Value	Manufacturing (Asia Countries)	Rank	Value	Services (Asia Countries)
4 5 11 13 14 16 17	86 85 82 81 81 80 80	India  Vietnam  Thailand  Malaysia  China  Philippines  Indonesia	9 15 16 20	87 83 83 80	Malaysia  Thailand  China  India

Note: Rankings reflect unrounded index values