For the UK firm looking east the ASEAN landscape may initially appear to be a complex melting pot of cultural differences, myriad legal systems and varying layers of red tape. However, businesses that are willing to conduct thorough research and consult the right people can capture new growth opportunities in this flourishing market.
The region boasts a population that is shifting towards the middle class, where consumer spending is up and the value of this decade's infrastructure investments are reaching into the trillions. Thankfully for Brand Britain, ASEAN is also highly receptive to UK companies.
ASEAN’s key growth areas
"In terms of what is driving the economy, it is really consumption. Where you are going to see the opportunities in terms of sectors; it is the fast-moving consumer product segment, services and IT services," says Siew Meng, HSBC's Regional Head of Global Trade and Receivables Finance for Asia-Pacific.
"We've got a young and growing population, so technology appeals to that segment of the population and there's a lot of demand there. There is also a fast consumption of goods in the area of healthcare and pharmaceuticals."
Infrastructure is a key focus for several ASEAN markets. Siew Meng reveals that the projection for infrastructure investments across the Asia-pacific region is around USD8 trillion, with more than half of that coming from the ASEAN region within this decade.
"The demand for infrastructure in Indonesia alone is estimated at about USD 300 billion, in Malaysia it is in the region of USD100 billion, and another country receiving major infrastructure investment is Vietnam, with estimated spend of USD120 billion by 2020," she adds.
Under the infrastructure banner, this opens up trade and partnership opportunities for project management, consulting, engineering, pre-feasibility studies and more before taking the heavy lifting and actual construction into account.
Securing a deal in ASEAN
While there are clear opportunities to be captured across ASEAN, it is worth noting that each country adheres to its own legal system and ranks differently on the World Bank's ease of doing business index. Malaysia currently ranks at 18, while Thailand sits at rank 49, so it is clear that parity has not been achieved yet.
However, Singapore currently ranks in first place and Siew Meng acknowledges that many UK businesses turn to the city-state first to gain a foothold in the region, before exploring opportunities in other nations.
While Singapore is held in high regard in terms of procurement transparency and speed, Siew Meng stresses that UK firms may consider finding a reliable partner within their target market who understands the landscape well.
Choosing a partner boils down to whether there are past relationships. You could start with a trading relationship or just export through them, but it is prudent to have established a track record or understanding of the company before going into an investment relationship
If there is no opportunity to pre-screen partners or work with a domestic firm first, there are many resource centres for UK firms to reach out to.
"The UKTI is one great resource, as is the British Chambers of Commerce, while banking partners like HSBC can be a point of support for UK firms, as well as legal firms. All of these can be a great reference to finding a credible partner in the market," Siew Meng explains.
It is clear that ASEAN is full of growth opportunities, bolstered by the region's overall receptiveness to UK companies. While positive, British firms need not tackle the challenge of moving into this region alone.
Piggybacking on existing relationships with local firms and reaching out to specialist bodies or banking partners can help further your knowledge and give you the confidence to move into this rapidly growing market.
For further information about trading internationally, visit the HSBC Connections Lounge at the International Festival of Business in Liverpool where an HSBC Trade Specialist will be on hand to answer your questions or call +44 (0)800 78 31 300.