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ASEAN: Back to basics, but with a twist
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For about three decades, much of ASEAN has experienced strong growth driven by exports, demographics and growing middle-class wealth. (Shutterstock/File)
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or about three decades, much of ASEAN has experienced strong growth driven by exports, demographics and growing middle-class wealth. But as we enter a new year, only one thing is certain: forecasting is difficult.
Despite the volatility and uncertainty ahead, the economic “basics” of population growth and urbanization that have driven ASEAN economic growth in recent years remain the big trends in 2017. For companies looking for growth, perhaps it is most critical in uncertain times like these to go back to the basics, but with a twist.
Targeting ASEAN is a logical and practical move for businesses. The region has a population of around 626 million people and is the third largest combined market in Asia. The 10-nation region is expected to remain resilient, with emerging Southeast Asia economies growing at approximately 5 to 7 percent. Indonesia and the Philippines also top many economists’ 2017 winners list for their domestically-sourced growth.
However, even as ASEAN becomes increasingly less vulnerable to external shocks, intraregional trade, which is largely constant at about a quarter of total bloc trade, will not be able to cushion businesses against potentially slowing growth in the US, European Union and China. This means that targeting ASEAN markets with a growing consumer base may not be enough.
While sticking to the basics, businesses have to consider a bigger playing field and doing things slightly differently.
Instead of focusing on ASEAN, businesses can look at the expanded region of ASEAN and South Asia, which offers an access to almost one-third of the world’s population. According to the World Bank, around one million people enter South Asia’s workforce every month. By 2030, ASEAN and South Asia will be home to more than one-fourth of the world’s working adults.
South Asia and Southeast Asia’s trade has also grown from US$4 billion in 1990 to $90 billion in 2013, according to the Asian Development Bank.
