Apart from China and India, what other opportunities does Asia hold for UK companies with international growth aspirations? Our ASEAN report looks at the economic and business trends that will shape the growth trajectories of a number of dynamic countries in Southeast Asia over the next 12 months and beyond.
We’ve drawn economic data from the International Monetary Fund (IMF) and business sentiment data from the Grant Thornton International Business Report (IBR), a quarterly survey of 3,000 businesses in 40 economies, to highlight the challenges and opportunities in the region.
Businesses in five ASEAN economies were interviewed for this IBR report: Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Which countries are in the ASEAN region?
The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand to accelerate economic growth and expand trade. Brunei Darussalam, Vietnam, Laos PDR, Myanmar and Cambodia have since joined the group.
In 2011, the combined economies of ASEAN accounted for 3.1% of global output. The largest members are Indonesia, which accounts for 39% of regional output, Thailand (16%), Malaysia (13%), Singapore (12%) and the Philippines (10%).
ASEAN growth and business optimism
Despite the slowdown in the global economy as a result of the continuing sovereign debt crisis in the eurozone, the region is expected to grow robustly in the medium-term. In the period 2012-16, these economies are expected to expand by 10% per annum on average, double the rate of the global economy. This growth is expected to account for 6.5% of total global growth over the next five years, increasing the share of global output of the ASEAN region to 3.9% in 2016.
Business optimism slipped slightly in the ASEAN region in Q2-2012, falling from net 27% to net 23%. Globally, business confidence picked up slightly to net 23%, up from net 19% in Q1-2012 on the back of improvements in mainland China and the United States.
Within the region there are some significant variations in business confidence. Businesses in the Philippines remain very optimistic about their economy over the next 12 months (90%), behind only Peru. Businesses in Malaysia are much less confident (0%), with Singapore (12%), Thailand and Vietnam (both 8%) also lower down.
ASEAN growth constraints
A lack of skilled workers is the key constraint on growth for businesses in the ASEAN region, cited by 43% of businesses. It is also cited as a major constraint by businesses in the wider APAC (ex.Japan) region (37%), well above the global average (28%). This lack of talent is a particular problem for businesses in Singapore (53%), Malaysia and Vietnam (both 46%).
The cost of finance is also cited as a major growth constraint by ASEAN businesses (32%), led by Vietnam (50%). Globally, regulations and red tape emerges as the top growth constraint (34%), but only Thailand in the ASEAN region comes in above this figure (40%). In Vietnam, the slowdown in global trade is a particular concern – shortage of orders/reduced demand emerges as the top constraint (56%).
It contains further profiling and includes forecasts for revenue and profit, employment, inflation and investment, as well as news on the new ASEAN Economic Community (AEC) which aims to establish regional economic integration by 2015.
Also check out our information on how UK companies can achieve international expansion on our Grow Global pages. –http://thinking.grant-thornton.co.uk/emergingmarkets/index.php/emergingmarkets_templates/article/asean_growth_forecasts_and_economic_profile_for_2012/
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