SINGAPORE, Jan 25: Southeast Asia’s economic fundamentals remain positive compared to other emerging markets, Singapore’s Deputy Prime Minister Lee Hsien Loong said as he urged global investors to look at the region.

Speaking at the World Economic Forum in Davos on Friday, Lee said the rise of heavyweights China and India has brought fiercer competition to the region, which still has yet to fully recover from the 1997-1998 Asian financial crisis and is grappling with the threat of terrorism.

But he said “the economic fundamentals of Southeast Asia remain positive, especially compared to other emerging economies.

It has a sizeable market of 500 million people, a skilful and educated workforce, and good infrastructure. For investors who want to spread their bets, Southeast Asia is a clear diversification play, said Lee, who is tipped to succeed Prime Minister Goh Chok Tong.

Copies of his speech were released here Saturday.

Southeast Asia, comprised of 10 nations ranging from more prosperous states like Singapore and Malaysia to backwaters Cambodia, Laos and Myanmar, need to resolve political and security problems and “take decisive actions” to bring back the region to full economic recovery, Lee said.

Its future lies in maintaining open, outward-looking economic policies and staying plugged into the global economy despite the risks that this entails, he said.

The region must also strengthen its links with major trading partners by pursuing free trade agreements, said Lee, whose country has signed such accords with Australia, New Zealand and Japan and has wrapped up talks for a pact with the United States.

While expanding its external trade wings, Southeast Asia must also integrate its diverse economies by expanding a free trade zone which eliminates tariffs on manufactured products and components to include liberalization in the services sector, he said.

China, the giant neighbour which has been attracting foreign investments at the expense of Southeast Asia, presents a challenge in the short term.

But in the long term, the opening up of the world’s most populous nation is an opportunity, in terms of being an export market and a major source of tourists, he said.

More and more affluent Chinese will demand services like healthcare and education, some of which will be provided overseas, he added.

India’s opening up will also augur well for Southeast Asia.

For Southeast Asia, a dynamic India would counterbalance the pull of the Chinese economy, and offer a more diversified basis for prosperity, Lee said. —AFP