2021 : Exciting opportunities for businesses in South East Asia

On April 8th, the debate of the International Cercle organized by X-PM Singapore welcomed Ian Riley and Robert Bruce who shared their experience and vision in simple and lively terms that made us want to expand into South East Asia now.

Let’s recall the following :

 

South East Asia has not finished growing

With a population of 655 million inhabitants, a rapidly expanding middle class, and an appreciated workforce that is now cheaper than in China, the region is currently benefiting from:

  • reconfiguration of corporate value chains: digitalization, relocation outside China, diversification of sourcing, sustainable development compliance,
  • large-scale Chinese investments, including the establishment of regional headquarters of a number of major technology companies
  • free trade within the region as well as external free trade agreements

In its recent forecasts, the IMF predicts a cumulative growth of more than 16% for the three years 2020, 2021 and 2022 against 6% for the United States, and less than 2% for Europe. South East Asia is on target to become the world’s fourth largest economic region by 2030.

However, the evolution of China’s strategy, particularly with regard to Taiwan, could disrupt the situation, although it is not known what the impact might be.

 

The region is not homogeneous

There are still major disparities between countries in terms of the business environment, legal aspects, taxation, education of resources and the level of digitalisation of the economy.

The pandemic has also increased the disparities within countries between high-performing companies and those that are faltering. The sharp increase in M&A activity in 2020 and Q1 2021 is evidence of real investor interest in seizing opportunities.

If we stick to the countries with the highest demographics, Indonesia and Vietnam can host more or less sophisticated industrial investments, as can Thailand, which has a highly developed automotive manufacturing sector. While the Philippines’, with its strong English language base, has well-established shared services infrastructure. Let’s not forget Singapore which continues to drive growth as a technology hub, reinforcing its presence as a global financial centre and a gateway for many MNCs to the region.

 

Now is the time to act

The region is so attractive for almost all economic sectors that it will quickly serve the additional competitiveness needs of Chinese and Western companies. We might as well position ourselves there and move quickly to implement development projects. And as one of our participants said, “let’s stop talking about the Far East as an exotic and distant place, let’s go there, let’s locate or relocate headquarters there”.