US companies seeking to expand in Asean has ranked Singapore as its top destination within the region, according to a survey commissioned by Standard Chartered for its Borderless Business: US-ASEAN Corridor report.
The survey, which was conducted in July, targeted senior executives at 40 US companies.
According to the survey, 93% of respondents expect their revenue to increase in the region over the next 12 months, while 86% anticipate an expansion in production over the same period of time.
Some 58% of executives polled say they are focusing on expansion in Singapore to capture sales and production opportunities. Indonesia and Thailand were the participants’ second and third choice respectively, with 45% and 43% indicating their plans to focus on expansion in those countries.
Among the companies polled, 57% consider Singapore the most desirable place to set up their regional headquarters for sales and marketing and corporate functions while 43% expect Singapore to be their research and development (R&D) and, or innovation centres.
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With the population in Asean projected to rise to 723 million by 2030 and 67% to be in the middle class, the region remains an attractive market for US companies.
According to the survey, access to the large and growing Asean consumer market (70%), the availability of abundant and skilled workforce (53%) and the diversification of production footprint (40%) were among the most important drivers for expansion into the region.
Furthermore, 43% of the respondents say they plan to increase their investments in Asean over the next three to five years to leverage on opportunities from the ratification of the Regional Comprehensive Economic Partnership (RCEP) agreement.
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Despite the optimism, the respondents are aware that the region comes with risks that need to be addressed as well. The top three being geopolitical uncertainty and trade conflicts (73%), the slow revival of the economy and drop in consumer spending (65%) and the ongoing Covid-19 pandemic or other health crises (63%).
Some of the challenges anticipated within the next six to 12 months include adapting their business model to industry practices and conditions (68%), understanding regional regulations, payment methods and infrastructure (60%) as well as building relationships with suppliers and adapting supply chain logistics (55%).
To this end, 68% of the executives polled have identified entering new partnerships and joint ventures (JVs) to increase market presence to drive growth in Asean and to mitigate the risks and challenges.
Investing in leadership and talent development (53%) and executing digital transformation programmes (48%) were the second and third most important areas for the executives’ companies to focus on.
To this end, 50% of these companies are seeking banking partners with one-stop corporate financing and capital-raising services, while 48% and 47% of these companies are looking for banking partners with foreign exchange hedging and comprehensive multicurrency settlement services and a comprehensive cross-border network and understanding of local markets respectively.
“Asean is core to Standard Chartered’s business strategy. An attractive growing market for consumer goods, medical devices and pharmaceuticals, the region offers US companies significant opportunities to expand their production and supply networks,” says Heidi Toribio, regional co-head, client coverage, Asia, corporate, commercial and institutional banking at Standard Chartered.
“Thanks to a sizeable market, increased adoption of new technology and a rapidly expanding middle class, Asean continues to be full of exciting business opportunities for US companies across various sectors. As US companies push ahead with their growth ambitions, their ability to diversify their production presence to increase supply chain resilience, align with consumer expectations and government priorities - such as Environmental, Social and Governance practices - and partner with local industry players, financial institutions and government agencies will influence their growth in this dynamic region,” says Steven Cranwell, CEO, Americas at Standard Chartered.
Photo: Bloomberg
