Population: 640 million
GDP: US$2.55 trillion
ASEAN member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam
The Southeast Asia region is expected to grow at a yearly average of 5.2% from 2018 to 20221, with studies projecting the Association of Southeast Asia Nations (ASEAN) to become the fourth largest single market in the world by 20302 - putting it behind only the US, China and the European Union.
The region’s steady growth is fuelled by an increasingly well-educated workforce, a wealth of natural resources, rapid urbanisation and growing infrastructure spending.
Another plus point for Southeast Asia is its strategic location – it is situated in the confluence of major trade routes, with US$5.3 trillion of global trade passing through each year3 .
1Source: “Economic Outlook for Southeast Asia, China and India 2018: Fostering Growth through Digitalisation”, OECD, 2018
2Source: "Winning hearts, minds in ASEAN", The Straits Times, 25 August 2017
3Source: “ASEAN Matters for America”, East-West Center Publication, 2014
As the market with the third largest population after China and India, ASEAN presents an exciting prospect for enterprises looking to grow their business.
Southeast Asia’s population is projected to increase from today’s 640 million to more than 710 million by 2030. In fact, by 2030, the median age in Southeast Asia will only be 33 years old.
The number of households in ASEAN earning more than S$10,000 per year is projected to reach 125 million by 2025. About 30% or 40 million of these will earn between S$25,000 and S$95,000 a year4.
All these point to a large and growing middle income class, hungry for all kinds of consumer products and services from luxury goods, to education, to wellness and leisure services.
4Source: HKTDC Survey of 1,000 ASEAN consumers earning more than US$1,000 a month, 2017
ASEAN countries are also strengthening linkages to better facilitate the movement of goods, develop services trade and reduce investment barriers. This vision for economic integration is shared by all ASEAN member states, and significantly increases ASEAN’s attractiveness as a business and investment destination. The end goal is an open, transparent and predictable investment regime in the region. Today, ASEAN receives more investment than mainland China and India combined5.
The ASEAN Economic Community (AEC) is one such example of how the 10 ASEAN members have committed to strengthening linkages and deepening economic integration. Today, 99% of goods traded between ASEAN member states are tariff-free. Another example of cooperation is the ASEAN Comprehensive Investment Agreement, which has also helped to provide more transparency, protection and recourse to investors from fellow ASEAN states. At the business level, various commerce chambers from individual countries also meet regularly to network and discuss industry issues. The Singapore Business Federation often organises conferences with its regional counterparts to better engage the regional community and obtain feedback from the ground. This includes participation in meetings of the ASEAN Business Advisory Council, which is the apex private sector body in ASEAN.
That being said, regional integration among ASEAN’s 10 member states is still a work in progress. There remains disparity among the various economies – from the openness to foreign investments to the types of regulations governing businesses to cultural differences. Singapore firms should not view the region as a homogenous bloc but customise their offerings to cater to environments and requirements of individual markets.
5“OECD Southeast Asia Investment Policy Review 2018”, OECD, 2018