Four out of five businesses surveyed recently have plans to expand into Asean in the next three to five years, with Indonesia being the top destination.
Their expansion plans are motivated mainly by the growing domestic demand of the regional countries and requests from their customers, according to an online survey by The Business Times and Standard Chartered Bank.
"Tapping the region's growing wealth appears to be a primary motivation for our respondents' investments into the region," said Mr Edward Lee, chief economist for Asean and South Asia at Standard Chartered Bank.
"This is interesting when placed against the context of global exporters from North-east Asia that tend to focus on operational considerations."
Mr Lee also said it is no surprise that Indonesia tops the list as it accounts for about 40 per cent of Asean's gross domestic product and has strong growth potential.
He presented the findings yesterday at The Business Times Leaders' Forum 2018, an annual event.
The survey, which was done between March 19 and April 22 this year, polled 129 business leaders and owners across industries.
Most who responded were small and medium-sized enterprises. About 43 per cent said their annual revenue was below $10 million, 17 per cent have sales between $10 million and $50 million, while 7 per cent have revenues ranging from $50 million to $99 million.
Among the larger companies, 16 per cent have turnover that exceeded $1 billion; 7 per cent said their annual sales came in between $500 million and $999 million, and 9 per cent saw sales of between $100 million and $499 million.
Almost all the respondents (92 per cent) have a presence in Singapore, followed by Malaysia (54 per cent). Next comes Indonesia (48 per cent), Thailand (40 per cent), Vietnam (37 per cent) and the Philippines (30 per cent).
Said Mr Lee: "Interestingly, only around 50 per cent of respondents have some presence in Asean outside of Singapore. There is clearly scope for expansion in the region."
Among those keen to expand into Asean, 34 per cent ranked Indonesia as their top priority in the next 12 months. Other popular countries were Malaysia (22 per cent) and Vietnam (22 per cent). Some respondents also said they were eyeing emerging markets such as Myanmar and Cambodia.
Among the 20 per cent with no plans to expand in the next three to five years, their top two reasons were the lure of other markets and manpower constraints.
The survey showed that companies doing business in Asean faced obstacles. The top two were dealing with local rules and regulations, and finding suitable business partners.
The region is not integrated, the respondents said, despite efforts to create an economic community. More can be done to encourage collaboration at the government level and among businesses, they added.
Ms Judy Hsu, Standard Chartered Bank's chief executive officer for Singapore and Asean markets, noted two important factors in helping businesses expand.
One is giving them in-depth market insights and helping them understand local regulations and business practices, and the other is letting them have access to the bank's international network to support them wherever they go.
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