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September 24, 2017

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Young, bold and confident — Indonesia, Vietnam are Asia's new economic stars

The scene: a coffee shop in a modern shopping center in Jakarta. Nineteen-year-old Shiela and her friends are nursing their 30,000 rupiah (about US$3.35) cups of iced milk tea while keeping their eyes glued to their Blackberry smartphones as they rapidly pound out what may be their thousandth message of the day.

Shiela represents the consumer segment now being targeted by big multinational brands, such as Nokia, Swatch and Coca-Cola. This group of consumers in the 15-20 age bracket tend not to save or display personal independence, preferring instead to support brands favored by their friends. One Indonesian marketing expert describes these young spenders as "ABG," or "anak baru gede," meaning "kids who've just grown up," and it is they who form the backbone of the emerging middle class that will drive Indonesia's economic growth in the coming decade.

Another scene, this time along Dong Khoi, the premier shopping street in Vietnam's Ho Chi Minh City. Thirty-one year-old single mother Nguyen Phi Nhu and her friends brave a downpour to exercise their passion for shopping. Nguyen is a mid-level manager for the Ho Chi Minh City branch of multinational pharmaceutical Abbott S.A., and she also owns her own public relations firm.

These well-educated, high-income women employed by foreign companies pattern themselves after the main characters of the U.S. TV series Sex and the City, yearning for the same economic independence, freedom to consume and enjoyment of life exhibited by Carrie Bradshaw and her friends.

For Indonesia and Vietnam, the times, indeed, are changing.

The archipelago of 10,000 islands endured a decade of suffering in the 1990s, dragged down by the dictatorship of then president Suharto, fierce ethnic clashes and the Asian Financial Crisis. But it has since rebounded, receiving kudos this year from the New York Times: "After years of inefficiency, Indonesia emerges as an economic model."

Torn asunder in the past by uninterrupted military conflict and now under the autocratic control of the Communist Party, Vietnam gained prominence in the eyes of global investors even earlier than Indonesia as a land of new opportunities. In December 2005, investment bank Goldman Sachs named Vietnam as one of the "Next Eleven" economies expected to "be the next BRICS" of the 21st century, and in a research report in April 2008, the bank called Vietnam "the next Asian Tiger in the making." The Southeast Asian country was also included among the Economist Intelligence Unit's "CIVETS" (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), considered as emerging markets to watch over the next 10 years.

The 320 million people living in Indonesia and Vietnam have seen their lives change dramatically from the turmoil of the past to the robust economic growth of the present, a transition that has left them more confident than ever, despite the recent global financial crisis.

Of the four BRICs (Brazil, Russia, India and China), only China and India experienced strong economic growth in turbulent 2009. Growth rates of 4.5 percent in Indonesia and 5.3 percent in Vietnam far outpaced the negative growth seen in Brazil and Russia.

With both countries expected to grow by over 6 percent in 2010, multinational corporations and investment banks are pouring in, sending foreign direct investment (FDI) soaring again. Indonesia's stock market has risen 40 percent this year, the highest in Asia.

Two major factors have enabled these two stars to shine brightly in the night: China's economic restructuring and the rise of a new Asian Way.

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