Corporates optimistic on ASEAN business opportunities

The findings underscore the impetus for greater effective public-private partnership (PPP), to accelerate recovery and resilience in ASEAN and beyond.

In 2021, ASEAN was the third highest recipient of FDI globally, with inflows of $174 billion, returning to pre-pandemic levels.

Some 50 per cent of ASEAN’s FDI inflows originate from the US, EU, and China. Intra-ASEAN FDI contributed about 12 per cent of the region’s inflows in 2021.

Trade agreements, such as the Regional Comprehensive Economic Partnership, are expected to further accelerate growth. With the agreement in place, 81 per cent of business leaders surveyed plan to increase investments in ASEAN over the next three to five years.

Overall, 93 per cent of business leaders expect positive revenue growth from their ASEAN businesses.

“ASEAN is an oasis of growth, with its GDP forecast to grow about 4 per cent annually to $4.5 trillion by 2030,” said Benjamin Hung, CEO, Standard Chartered Asia.

“Amid global complexities, we see structural trends presenting significant opportunities in ASEAN, where there is growing inter-connectivity in trade and capital flows, strong digital adoption, and an acceleration of green transition.”

“Corporates need to act decisively to capture what ASEAN has to offer today. As a leading international bank in the region, Standard Chartered is committed to supporting our clients in capturing these exciting opportunities.”

The report indicates that corporates are optimistic about their businesses in Vietnam, with 58 per cent having existing and future plans to expand sales in Vietnam.

Vietnam has made significant progress in becoming a dynamic, cost competitive nation. The country has received greater attention as an alternative manufacturing hub as businesses increasingly adopt a ‘China plus one’ diversification strategy.

Anchoring on three strategic national plans- New National Industrial Policy, Digital Transformation Plan, and National Strategy on Green Growth, Vietnam has a long-term plan to digitise production and supply chains.

Michele Wee, CEO, Vietnam, Standard Chartered, said, “Vietnam’s medium to long-term prospects remain bright, supported by its favourable demographics, improving domestic fundamentals and strong commitment to regional and global integration. As an increasingly important player in international trade and global supply chains, and with its role as an alternative manufacturing hub, Vietnam continues to present appealing opportunities for businesses looking to expand in the region.”

The report showcases a framework, representing the six growth pillars that corporates are pursuing to advance in ASEAN: Talent, Hi-tech, Regulatory, Infrastructure, Value chain and Environment (THRIVE).

To overcome the aftermath of the pandemic, the findings highlight the top two growth pillars, where each sector is prioritising their investments in the next three years. For instance, two growth pillars in the construction and Infrastructure sector are Value chain and Talent; and for Digital and E-commerce sector two focus areas are Talent and Hi-tech.

The report indicated that business leaders will also progressively step-up on net-zero commitments to drive long-term growth, with some 52 per cent of those surveyed planning to invest in sustainability initiatives within the next three years.

The findings showed that the top three areas where collaboration needs to be strengthened in the next two to three years to advance progress are: forming more new partnerships to unlock potential across the value chain; upskilling to future-proof the workforce; and developing infrastructure solutions more proactively through PPP.

When looking for a banking partner, business leaders consider: digitalised platforms for foreign exchange (FX) and transaction banking to provide speed to market with real-time access; comprehensive multi-currrency settlement services to address the customers’ FX hedging needs across their footprint markets; strong cash management capabilities and widespread cross-border network with deep understanding of local markets.

Heidi Toribio, regional co-head, Client Coverage, Asia, Corporate, Commercial and Institutional Banking, Standard Chartered, noted that regional and international companies are increasingly realigning their business models and embedding sustainability to future-proof their operations.

“As the only international bank with full presence in ASEAN, our diverse network, in-depth local knowledge and comprehensive suite of capabilities set us apart as the ideal banking partner,” she said.

Businesses remain optimistic for remainder of the year Amid mounting hardships, many firms remain upbeat about reaching their full-year business targets, possibly even earlier than scheduled.

Optimistic outlook for economic growth of ASEAN+3 The ASEAN+3 Macroeconomic Research Office (AMRO) on April 12 published its annual ASEAN+3 Regional Economic Outlook (AREO) 2022 which forecasts the region’s growth at 4.7 percent this year and 4.6 percent in 2023, with growth for ASEAN at 5.1 and 5.2 percent, respectively.