Why Your Business Should Consider Southeast Asia
Southeast Asia's population is growing rapidly, numbering around 680 million. Not only that, but the economies of Southeast Asia are also among the fastest growing in the world. According to Statista, in 2020, the total estimated gross domestic product of all ASEAN states was approximately 3.08 trillion U.S. dollars—a significant increase from previous years.
Southeast Asia offers a business-friendly environment for foreign investors. For example, Singapore has low taxes for companies and a very easy setup process for new businesses. Furthermore, Singapore has been consistently ranked among the world's best places to do business and continues to draw high numbers of foreign investors.
All in all, Singapore offers one of the easiest and quickest business registration processes, making it a popular destination for investors looking to start a business.
The Benefits of Expanding Business into Southeast Asia
Here are some reasons why it makes sense to target the Southeast Asian market:
1. Faster economic growth in ASEAN
According to the ASEAN, foreign direct investment (FDI) flows into the ASEAN fell by 25% to US$137 billion from an all-time high of US$182 billion in 2019 due to the impact of the COVID-19 pandemic. Though investment in the region declined, ASEAN remained an attractive destination for foreign investors. Its share of global FDI rose from 11.9% in 2019 to 13.7% in 2020. In addition, the combined gross domestic product of ten ASEAN countries totaled US$3.2 trillion in 2019. This makes ASEAN the fifth largest economy in the world.
2. Low barrier to entry
In Southeast Asia, governments have created policies to attract foreign businesses and are eager to do business with them. The region's relaxed regulations and low costs allow foreign businesses to establish themselves quickly.
3. Technology that is accessible to everyone
In Southeast Asia, the internet and mobile devices are ubiquitous. The consumer market is hyperconnected. Many citizens living in cities own smartphones with 4G or 5G data connectivity, and public Wi-Fi hubs are available in many urban areas. As a result, both local and international companies have entered the Southeast Asian market for e-commerce in various industries, including food and fashion.
4. Tech talent is on the rise
Businesses that expand internationally without the right talent on board risk failure. However, Southeast Asia has a large population of digital natives who can help drive your business forward. Singapore has a well-developed higher education system, and the country regularly ranks among the top in the world for MBA and university rankings. The Philippines and Vietnam are becoming increasingly important markets for IT and engineering talent.
The World Economic Forum's report found that young people in Southeast Asia are increasingly motivated by learning and development opportunities. ASEAN youths show a strong commitment to lifelong learning and a growth mindset, which will allow them to succeed in a rapidly changing global environment.
According to the World Economic Forum’s chart, ASEAN youths show a strong desire to work for a foreign multinational company. Today, 8.6% work for a foreign multinational. In the future, 18.8% would like to work for one.
The pool of qualified talent has grown, and many of these individuals are interested in working for foreign multinational companies. This entrepreneurial spirit will help your business thrive in new markets.
5. Rising consumer income and demand
As the incomes of ASEAN consumers continue to rise, their demands for higher quality products also increase. Both Singapore and Malaysia have well-developed economies, making them popular entry points for companies looking to expand their presence in the region. According to Trading Economics, consumer spending in Singapore increased to SGD 45497 million in the second quarter of 2022 from SGD 43741.30 million in the first quarter of 2022. Long-term investment opportunities exist in Southeast Asia for investors who enter the market early.
The above information is a summary of the reasons and opportunities why you should expand your business to Southeast Asia. Entering the Southeast Asian market is a good idea because it will help grow your business in the long run. Acc Pro (Singapore) provides International Expansion services to businesses seeking to enter the Southeast Asian market. Contact us to learn more about how we can help you get started with our team of specialists.