As many as 88% of European companies working in the Asean region expect business growth in this region over the next twelve months, according to a survey conducted by the Standard Chartered Bank.
“The Asean markets continue to offer huge opportunity for European companies, both for those
looking to diversify and expand their investment and trade activities , and those who are well aware of the deep technological expertise and significant consumer base across the markets,” says Robert Newell, managing director, Global Corporates, Europe at Standard Chartered.
The growing consumer market, access to the global market facilitated by free trade agreements, diversification of production, and the presence of a reliable supplier base have all been listed as reasons for expansion into the Asean region by the corporations surveyed.
The Regional Comprehensive Economic Partnership (RCEP) is expected to attract additional investment into the Asean region.
According to the same survey, the same companies see Vietnam, Malaysia and Thailand as the markets with the most expansion opportunities in the region. In terms of target markets within the region, 60% of the companies are focusing on expanding in Vietnam to capture sales and production opportunities. This is followed by Malaysia (53%) and Thailand (48%).
In addition, 77% of European companies aim to establish their regional headquarters in Singapore to tap on expansion opportunities in Asean.
See also: Asean and EU seals world's first region-to-region aviation agreement
However, there have also been some risks associated with the Asean region. For example, geopolitical instability and trade wars, Covid-19 pandemic and other potential health crises, and slow economic revival and a decrease in consumer spending have all been identified as economic issues troubling the Asean region.
European companies believe that in order to surmount these problems they must understand regional regulations, adapt their business models, and build relationships with suppliers to adapt their supply chain logistics.
Additionally, in order to reduce risks, European businesses coming into the Asean region believe that they must enter joint ventures to have a stronger market presence, partner up with banks with foreign exchange hedging to support growth, comprehensive understanding of local markets, and finally advisory services.
“Europe and Asesan enjoy very strong economic ties. The region is the European Union’s (EU) third largest trading partner outside Europe with close to €190 billion ($304.18 billion) of trade in goods in 2020; and the EU is ASEAN’s third largest trading partner, accounting for more than 10% of Asean trade. As Asean emerges as a global economic powerhouse, it presents unparalleled opportunities for European companies,” says Rino Donosepoetro, vice chairman, Asean & President Commissioner Indonesia at Standard Chartered.
Photo: Standard Chartered
