It’s no surprise that Prime Minister Scott Morrison is jetting to Vietnam.

With the members of the Association of Southeast Asian Nations (ASEAN) surpassing the US as China’s largest two-way trading partner in the first half of 2019, ScoMo could be forgiven for being covetous of a piece of the region’s fast-growing economic pie.

Australian business has tended to glance at south-east Asia while staring at the ascendance of north Asian giant China, which a decade ago offered the allure of a 1 billion-plus population and double-digit growth.

While China leapfrogged Japan to become the world’s second-largest economy in 2010, growth now at a 27-year low of 6.2 per cent isn’t quite the standout compared to the 5.1 per cent and 5.2 per cent the International Monetary Fund is forecasting for ASEAN nations this year and next.

The emergence of China as the centre of gravity for Australia’s trade growth is underscored by the increase in the weighting of the yuan in Reserve Bank of Australia’s trade-weighted index.

From 22 per cent in 2011, the weighting of the yuan has grown to 27 per cent as its voracious appetite for minerals and energy provided a welcome boost to Australia’s income on top of demand from traditional markets like Japan, South Korea and Taiwan.

That south-east Asia hasn’t featured prominently on the radar of Australia is underscored by the region’s weighting in the RBA’s trade-weighted index.

From a high of 16.4 per cent in 2013 to 14.7 per cent in 2017, the five south-east Asian currencies held a total weight of 14.8 per cent in 2018.

Chinese companies have decided to step up their presence in the region, especially Vietnam, and it’s time Australian businesses and investors started paying attention as well. The region offers a collectively large population and enjoys many of the features that made China attractive, such as cheap labour.

With wages in Vietnam between 38 per cent and 54 per cent of those in China according to UOB, it’s easy to understand why Chinese companies are looking to restructure their supply chains at a time when the Trump administration is cracking down on exports from China.

But it’s not just Chinese companies that are pushing into the region. Chinese President Xi Jinping’s signature Belt & Road Infrastructure initiative delivered a funding resurgence in the region in the first half of 2019.

According to Maybank, Chinese infrastructure and construction contracts in the region rose to $US11 billion by the end of June, up from $US5.6 billion in the previous year.

While the US and Japan are looking to invest more in the region as a bulwark against China’s influence, the pace of growth of Chinese investment is impressive even in the face of some opposition.

Newly registered foreign direct investment in Vietnam grew 200 per cent in the first seven months of 2019 according to Maybank, while flows in Thailand in the first half exceeded the full amount for 2018. First-quarter FDI flows in Malaysia rebounded 65 per cent in the first quarter after two years of decline.

While the region is clearly prospective for Australian business and investors, there are challenges in the short term. Both Singapore and Thailand have downgraded their growth outlooks in recent weeks given the global trade headwinds.

But for equities investors, a basket of south-east Asian stocks has provided solid returns over the longer term. The MSCI All Country ASEAN Index (measured in US dollars) has generated a 7.2 per cent return over the past 10-years compared to a 4.9 per cent return from the MSCI Emerging Markets Index and 9.8 per cent from the MSCI All Country World Index.

Valuations don’t look overstretched, albeit that does reflect the heavy weighting in the index of Singaporean banks and Singapore Telecom.

The MSCI AC Index at the end of July was trading at a forward price-earnings multiple of 14.6 times, which is a little more pricey than emerging markets at around 12 times and developed markets at 15 times.

South-east Asia has proven challenging in the past, with political turmoil, volatile currencies and massive accumulations of debt among the issues that have wrong-footed investors over the past couple of decades. But if investing is about following the money, then the flow of capital into the region means investors should have south-east Asia on their watchlist.