Doing Business in Southeast Asia
Southeast Asia is emerging as a new economic powerhouse, fuelled by its ideal demographics, abundant growth opportunities, and ability to attract local and multinational businesses. These factors signal a promising future for the region's economy. What impact will this have on businesses looking to expand their presence internationally?
Demographic and Opportunities
With a population of 680 million people, Southeast Asia's demographics make it an ideal location to provide excellent opportunities for economic expansion. This is 50% higher than the European Union and more than double that of the United States. A large portion of the region’s population is becoming wealthier and more educated, with an increasingly skilled workforce and competitive wages. Singapore, in particular, is known for having one of the top education systems and is ranked second globally for top talent. Furthermore, Southeast Asia's skilled youth will bring a growing consumer base in the coming years. By 2030, an estimated 140 million new consumers will arrive in Southeast Asia, empowered and connected through enhanced digital skills.
Southeast Asia's e-commerce growth reached 20.6% in 2022, generating revenues of $89.67 billion, a $15.31 billion increase from the previous year. This boom in e-commerce will undoubtedly benefit businesses in this industry looking to expand into the ASEAN market space and allow them to leverage on consumers here that will only continue to grow in the coming years. Furthermore, the internet economy in Singapore, Vietnam, Thailand, Philippines, Malaysia, and Indonesia is expected to reach $360 billion by 2025, driving significant economic growth in the region.
Another strong point is Southeast Asia's entrepreneurial spirit and investment capacity that has grown along with its competitive workforce and salaries. In 2022, Singapore was ranked the fifth wealthiest country worldwide and second wealthiest in Asia, attracting high-net-worth individuals for both business and living. Another country that demonstrates considerable promise is Thailand, whose wealth is expected to grow by 60% from 2022 to 2023, and the number of Thai millionaires is projected to double.
Fostering of Local and Foreign Businesses
Southeast Asia's location and low trade barriers provide advantages for both local and foreign businesses. The region is strategically located at the intersection of two of the world's largest free trade agreements - the Regional Comprehensive Economic Partnership and Trans-Pacific Partnership that enable businesses to engage in profitable trade with the rest of Asia, Europe, and North America.
Moreover, the region is anticipating a surge of multinational business expansions in the future as the effects of Covid-19 continue to diminish. Given its close proximity to China, which is Southeast Asia’s top external trading partner, multinational organisations can easily seek an affordable and diverse supply chain. Additionally, Singapore, which has been a strategic maritime hub for centuries, has now emerged as a leading digital hub too. Foreign companies are drawn to Singapore's favourable business environment, making it an ideal location to establish their headquarters before expanding to other parts of Southeast Asia.
The increasing inflow of FDI and multinational businesses in the region will continue to build the Southeast Asian economy in the coming years.
Why this matters
Businesses can benefit tremendously from Southeast Asia’s economic growth. For those looking to extend their reach to Southeast Asia, Singapore’s strategic location, anti-corruption laws, welcoming business environment and diverse population make it an ideal hub for foreign businesses. By establishing their presence in Singapore, international companies can feel confident and focus on expanding their operations in the region.
RSM Stone Forest’s professionals are experienced in guiding clients to set up, do business and navigate the regulatory environments in ASEAN. Contact us here for a chat today.
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