ASEAN: A Region Gaining in Global Relevance
For many Asian companies looking to expand into new markets, targeting the Association of South East Asian Nations (ASEAN) has long been a logical move.
The 10-nation region is expected to remain resilient in 2017, with emerging Southeast Asia economies growing at approximately 5-7 per cent.
However – even as ASEAN becomes increasingly less vulnerable to external shocks – intra-regional trade will not be able to cushion businesses against potentially slowing growth in the US, European Union and China.
By adding South Asia to the strategy, companies will have access to around a third of the world’s population
This means that targeting ASEAN with its growing consumer base may not be enough – businesses have to consider a bigger playing field, and countries such as India, Bangladesh, Sri Lanka and Nepal in South Asia should now be on the hit list.
ASEAN has a total population of around 626 million people, but by adding South Asia’s 1.7 billion people to the strategy, companies will have access to around a third of the world’s population.
Yet, companies in ASEAN tend do more business with other East Asian or Southeast Asian countries, and shy away from South Asian markets because they lack familiarity, experience and contacts.
An Increasingly Business-Friendly Environment
However, South Asia is becoming increasingly business friendly, with both Indian Prime Minister Narendra Modi and Sri Lankan President Maithripala Sirisena implementing pro-business policies. Likewise, policy reforms in recent years have created a more open and competitive environment in Bangladesh.
Meanwhile, South Asia’s low wages – which are amongst the lowest globally – make the region an attractive business location, as labour costs in East Asia and Southeast Asia continue to rise.
The expected investment flows to South Asia and ASEAN from China’s ‘One Belt, One Road’ initiative present further opportunities, as the increased fund flows could help both regions adapt to potentially increased trade protectionism, a situation that even the rising US dollar may not be able to counter.
Closer Ties, Stronger Connections
Increased business exchanges will call for greater connectivity led by physical and financing infrastructure. As transport and infrastructure networks improve, cross-border business will become easier.
2017 promises to be an unpredictable year, but businesses can thrive through exploiting the strong opportunities – not just in ASEAN, but also in South Asia.
The growth created by more than 2.4 billion people working to improve their lives in these regions is too strong to be held back. Capturing this will require agility, new connections and, for many companies, finding opportunities geographically closer to home.