ASEAN First business – A growing trend & opportunity

A recent opportunity to present on the Future of ASEAN at a Credit Suisse- SCCCI (Singapore Chinese Chamber of Commerce & Industry) event led me to take a closer look at growth opportunities in the region. Boasting a population of over 630 million people, it is one of the fastest growing economic regions in the world. By 2025 it is even expected to overtake Japan and be possibly the third largest economy in the world. The governments in the region got together to form the AEC (ASEAN Economic Community) to make it easier for businesses to operate across the 10 diverse countries in ASEAN. They have made incredible progress in reducing the taxes and enable ASEAN to be viewed as a single market and production base. The real potential will be realized when the governments are able to unlock the challenges that exist in helping companies view this market as a single pool of regional talent. The increased ease of labor transfer and free flow of services across countries can propel this region to be an economic powerhouse of the world. Today businesses operating in this region do not have any benefit in hiring a talent from ASEAN as compared to hiring them from any other country. Infact, in recent years, it has been much more difficult to hire people from Philippines and Indonesia in regional jobs out of Malaysia and Singapore.

It is also noteworthy that global multinational companies have done well in developing ASEAN as a region for their products and services. Every major American, Japanese and European company has an ASEAN strategy in place. On the contrary, it can be argued that there are truly very few ASEAN FIRST businesses. ASEAN First business could be defined as:

  • ASEAN headquartered companies which have a good geographic revenue distribution coming from multiple ASEAN countries beyond their country of origin;
  • They are founded with the primary objective of serving ASEAN markets (not just their home market) and leverage the full value that the region provides;

As I scan around for true ASEAN first businesses, companies such as Axiata (regional telecom service provider) and Airasia emerge in top of mind recall to have really exploited the opportunity as an ASEAN first business. Grab, Lazada and Zalora are the new age businesses that have fully leveraged the unique story of serving the ASEAN markets. 2017 can also be regarded as a major breakthrough for ASEAN First, as we saw SEA Group ( positioned as a truly ASEAN company (one of the first UNICORNS from this region), got listed in NASDAQ with a market capitalization of over US$4.5 billion. It is possible that it maybe easier for new age digital businesses to adopt this ASEAN First strategy as compared to traditional businesses. Smartphone and mobile internet in this region is highest when compared with economies with similar GDP per capita. Tourism, Sports and Entertainment could be the other sectors that are ripe for an ASEAN FIRST play.

I strongly believe we are the very beginning of a growing number of companies that will leverage the business opportunity of positioning themselves as an “ASEAN First” business. This is a MEGATREND that is taking shape. ASEAN should be the logical regional / internationalization approach for every single company founded in this region. It is and should be a lot easier to grow in ASEAN, nearer to home than trying to grow in tougher markets like China and India. Share with me the names of other ASEAN First businesses I have missed. Let me also know what do you believe will be the single biggest driver for us to realize the ambition and aspiration of many more true ASEAN First businesses.

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