ECA

Right Approach to the Massive ASEAN Opportunity

02.09.2017 Peter McKenna
Right Approach to the Massive ASEAN Opportunity

Businesses across all sectors, of all sizes, from all parts of the world are flocking to Southeast Asia to be part of the huge growth story there. The 10 countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam - collectively known as the Association of Southeast Asian Nations (ASEAN), are a global “hotspot” for growth and diversity, driven by the fast growing consumer class and rapid urbanisation.

Over the last 10 years, GDP has tripled to US $2.5 trillion with an annual growth rate of 5%, and now ASEAN is the 7th largest economy in the world. Its growth rate is only surpassed by China and India, and ASEAN is expected to be the world’s 4th largest economy by 2050. 

Australia and ASEAN are close neighbours, with free trade and other agreements driving an expanding and deepening regional integration. This integration is powering up two-way trade and investment between Australian and ASEAN businesses, but the potential for further business is massive.

To make this business happen, Australian and ASEAN businesses need a broader perspective and business approach that takes in the wider Australia-ASEAN region.

This is the focus of the Australia-ASEAN Business Council (AABC). The AABC is revitalising as a powerful B2B platform where Australian and ASEAN member businesses work together in doing trade and investment across this wider region.

Opportunity Businesses are attracted to ASEAN’s growth and diversity story that is providing trade and investment opportunities in all sectors across ASEAN.

ASEAN’s mix of mature, emerging and frontier markets, which are being economically integrated into a single market and production base under the ASEAN Economic Community (AEC) launched in late 2015, is fuelling these opportunities.

While still a work-in-progress, the AEC is consolidating ASEAN’s position as a high growth, globally connected economic powerhouse, strategically located at the centre of the Asian growth engine between China and India.

Businesses around the world are attracted to ASEAN’s growth drivers:
  • World’s 3rd largest and young population of 620 million
  • World’s 3rd largest work force
  • Mass movement of over 90 million people to urban areas by 2030
  • Consumer class doubling to around 160 million households by 2030
  • World leaders in using technologies like Facebook and mobile phones
  • Infrastructure needs expected to approach $100 billion annually.

Right Approach

This huge ASEAN opportunity sits on Australia’s doorstep. ASEAN is now Australia’s second largest two-way trading partner. The traditional trade route, mainly through Singapore, is now changing to be more direct with Malaysia, Thailand and Indonesia.

Two-way investment with ASEAN, however, is still low compared to other countries, and not widespread across ASEAN countries.

Doing business in ASEAN requires a different approach to that used by Australian businesses in their traditional markets.

It starts with the recognition that, despite the wide diversity in markets, languages, cultures and business environments, business has been transacted across these ASEAN markets for centuries, and foreign SMEs and large companies, including Australian, are now doing the same.

Successful companies are skilled first in building trusted relationships and arrangements through effective networking and collaboration to manage the diversity and risks in doing business. Second, they adapt to the mindset and approach of most
ASEAN businesses, large and small, which are family or privately owned. These businesses are typically focused at the longer view, with less decision-making bureaucracy.

Australia’s young growth companies look a natural fit with ASEAN businesses. Their CEOs have a deeper appreciation of ASEAN cultures and customs given Australia’s multiculturalism over the last 20 years, and are usually privately owned.

They are more likely to have the mindset to culturally connect and collaborate, with the flexibility and agility required to work with ASEAN businesses in growing ASEAN.
  • The right approach to ASEAN also includes:
  • Taking a regional, not just country approach to business planning
  • Looking for opportunity in the diversity across markets
  • Finding similarities in the opportunities across markets
  • Driving innovation in business offerings and solutions
  • Using free trade agreements to improve competitiveness

AABC helps B2B

The time for Australian and ASEAN businesses to collaborate in making trade and investment happen is now.

AABC’s strong relationships across Australia and ASEAN, enforced by business briefings, conferences, training and clustering, directly support B2B engagement, exploration, and skills development across the region.

The AABC invites new members from Australia and ASEAN in all industry sectors. The Export Council of Australia (ECA) is an Australian Partner of the AABC. ECA CEO Lisa McAuley says ASEAN has been overshadowed by the recent FTAs with China, Korea and Japan. But awareness will grow as the RCEP agreement is finalised and business sees ASEAN’s central position in the Asia growth region.

“We are together with the Australia-ASEAN Business Council in promoting ASEAN as a key opportunity for Australian business,” says Ms McAuley.

The ECA’s ASEAN Connected report and Toolkits are also useful references. Peter McKenna is Managing Director, Venturenauts (which specialises in helping Australian and ASEAN companies develop their international business in markets across Southeast Asia and Australia); and Vice President, Australia-ASEAN Business Council.

*This article was published on pages 10-11 of Winter 2017 International Business Today Magazine.


The full version of this article is published at www.australia-aseanbc.org

 

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