ASEAN looks ahead to the next 50 years in partnership with global companies
This year the Association of Southeast Asian Nations (ASEAN) celebrates its 50th anniversary. But far from slowing down in its middle age, the half-century-old organisation is thriving, with its 10 member countries stronger than ever as they strengthen trade ties and create growth opportunities.
ASEAN started as a humble agreement between five founding countries – Indonesia, Malaysia, Philippines, Singapore and Thailand – to encourage political, economic and cultural cooperation as well as promote regional stability during the Cold War.
Back then Southeast Asia was torn apart by conflicts and economic uncertainty. But as the region became more stable and the drive towards integration picked up pace, ASEAN continued to expand, first with Brunei joining in 1984 and later Cambodia, Laos, Myanmar and Vietnam in the late 1990s.
Today, ASEAN is an economic powerhouse with 625 million people, and the world’s seventh-largest economy with a GDP of US$2.5 trillion.
More than 60 percent of ASEAN’s population is under 35 years old, creating a steady workforce and a large future consumer market. At the same time, the region’s youth are tech-savvy, and e-commerce is poised to grow exponentially in Southeast Asia in the coming years.
The rising consumer class, increasing trade and investment opportunities, and greater demands for goods and services are all set to support the region’s prosperity.
ASEAN as a vital trading partner to the U.S.
The rapid growth of ASEAN has made it an attractive destination for investment, with the U.S. being a key trading and investment partner.
In fact, ASEAN is today the United States’ fourth-largest trading partner and the largest single foreign direct investor in the ASEAN region. The region benefits from over US$306 billion in investment. ASEAN is extremely important to the U.S., with nearly 4,700 companies in the region and over 500,000 American jobs supported by business with ASEAN.
“ASEAN is the most competitive region for U.S. businesses, with high adaptability, innovativeness, and a large pool of skilled and unskilled resources,” according to the 2018 ASEAN Business Outlook Survey, an extensive study that is published annually by the American Chamber of Commerce Singapore.
Today, on the 50th anniversary of ASEAN, many U.S. companies are optimistic about growth prospects and commercial opportunities in the region.
In the survey, which was done in collaboration with other AmChams in the region, 58 percent of respondents expect that ASEAN markets will become more important to their companies’ worldwide revenue over the next two years. In addition, 80% expect their companies’ level of trade and investment in ASEAN to increase over the next five years.
For multinational companies like Coca-Cola, ASEAN’s potential is clear. The company just completed 105 years of operations in the Philippines and 91 years in Singapore and Malaysia. With a presence in all 10 ASEAN nations, Coca-Cola has multiple manufacturing plants in Indonesia and Philippines.
Additionally, the company recently unveiled a new $79 million storage and distribution centre in Singapore, which will support the company’s business in the region. Coca-Cola is investing heavily in automation and technology within this facility as it looks to develop more beverage options for consumers here.
“We have seen steady growth momentum over the past 10 years and we forecast that between now and 2022 the ready-to-drink market will almost double,” said Iain McLaughlin, President, ASEAN Business Unit, The Coca-Cola Company in the survey.
“For us, ASEAN is viewed as one of the key growth drivers for the business overall, and we, together with our bottling partners, are investing to be in a position to capture that growth,” he adds. “In addition to China or India, ASEAN has considerable growth potential in the short-term.”
The Citigroup has also benefitted from its presence in the region. “In 1971, Citi had 150 employees in Singapore. Today, we provide employment to 9,000 individuals, making Citi the largest foreign banking employer in Singapore,” said Amol Gupte, Head of ASEAN and Citi Country Officer for Singapore, Citi. 40% of Citi’s Asia-Pacific staff is located in ASEAN and the group has global processing hubs and data centres in Singapore, Malaysia, and the Philippines.
Shaping this growth further is the ASEAN Economic Community (AEC) that was established in 2015, which aims to create a highly competitive economic area with a single market and production base, strengthened export capacity and better-integrated regional supply chains. As part of the implementation of the AEC Blueprint 2015, measures have already been taken to reduce and eliminate barriers to trade in goods, services and investment. As the AEC matures, it is anticipated to further improve the environment for doing business in the region.
Singapore is the ideal place for MNCs looking to expand in ASEAN
One of the founding members of ASEAN, Singapore ranks among the top 10 in the world for government transparency and intellectual property protection, making it an ideal regional business hub for multinational companies (MNCs) wanting to expand to Asia.
Singapore’s ideal location, competitive workforce and pro-business environment have enabled the country to be the world’s gateway to ASEAN and the rest of Asia.
It is the perfect place to grow a business given the relative ease of springboarding to other emerging markets in the region.
“We chose Singapore to set up our business operations for Asia Pacific due to several reasons including political stability of the country, an efficient government, ease of doing business, and also the openness of the regulatory framework. The country is pro-consumer choice and progressive,” said Ooi Huey Tyng, Visa Country Manager for Singapore and Brunei. She also points to the available talent pool, explaining how Visa has “access to global talent even though we’re based out of Singapore.”
With Singapore offering a gateway to Asian markets, MNCs looking to reap the benefits of the next 50 years of ASEAN are now in a better position to do so than ever before.