In recent weeks, Australia and Singapore have entered discussions about opening their economies safely to one another, in the form of a “travel bubble” between the two countries. If it takes off, the travel bubble could be among the region’s first. Throughout the pandemic, Singapore and Australia have led the way in controlling the spread of the disease and working hard to bring back economic confidence.
The countries are currently in talks on the best approach, focusing on mutual recognition of vaccination certificates and the resumption of quarantine-free travel with priority given to students and business travelers. With many businesses eager to pivot and access new customers, news of the travel bubble has been cautiously welcomed. However, many companies are still asking whether now is the time to expand your business into Asia.
The ASEAN region is home to an array of countries and cultures. It is also one of the most coveted consumer markets for fast-growth SMEs and global businesses. Yet, given the highly diverse markets and cultural environments, selecting the correct country for expansion and growth can be a challenge, especially for SMEs. An in-depth understanding of the market landscape is critical to have the best chance of success, and in many cases, a presence on the ground is needed, too. But with that in mind, now is an opportune time to expand your business into the region and take advantage of favourable market conditions.
Based on our experience on the ground in Asia, here are five key reasons why now is the time to expand your business into ASEAN:
1. Intra-regional trade is expected to remain resilient
Experts have predicted there will be robust intra-regional trade — where ASEAN nations and their close regional trading partners focus on cross-border commerce with one another rather than trade with countries on the other side of the globe. This type of trade focus accounts for over 60 per cent of all business in the region.
With the value of intra-regional trade to remain high throughout 2021, Asia’s appeal has only grown. Furthermore, bigger corporations that had not previously considered the risk of entering the ASEAN market viable, will be looking to update their commercial strategies because of COVID-19. So, now is a good time for SMEs that are more agile and located closer to the region — like in Australia — to take serious steps to invest in Asia.
2. Well-developed infrastructure and funding
ASEAN countries like Singapore have well-developed, orderly business environments, with generous funding and advanced infrastructure to support SMEs and global businesses. Singapore also boasts a robust start-up and tech ecosystem, and a booming digital economy.
Singapore’s sophisticated business infrastructure, both physical and otherwise, functions as a gateway for SMEs and global businesses to expand your business into other parts of Asia. Not too far away, South Korea, which has positioned itself as a high-tech global business hub with a flourishing start-up ecosystem, is a significant player in Asia’s technology and internet sectors.
Vietnam’s tech industry has recently risen to global prominence and is growing quickly, with many investments pouring into the country. Similarly, Manila and Kuala Lumpur have seen rapid development in their start-up ecosystems and their reputations as SME hubs, with an increasing number of early-stage businesses making waves in both countries.
3. Quality and quantity of local talent
Regional talent is one of the key benefits of expanding to the Asian market. There is a vast and diverse talent pool that SMEs can leverage to achieve their expansion plan. The key to success in the ASEAN region is the ability to tap local talent.
Picking the right local talent within a chosen Asian country can help businesses get the head start they need in that particular market. Local talent can provide a more nuanced understanding of the industry and the business environment, allowing SMEs with limited financial resources to avoid the costs associated with importing talent from other parts of the world and training them in the relevant business culture, languages and customs. This in turn helps the business to generate revenue sooner.
4. Highly competitive
ASEAN markets are highly competitive. Despite this, a business with a clearly defined value proposition, one that stands out from its peers, or one that fills a specific gap in the market can be successful with the right market strategy.
Furthermore, SMEs and individuals must be able to localise any product or service when expand you business into Asia, since each country and culture has its own specific demands based on many factors such as the economy, consumer market needs and future regional needs.
5. Monetary incentives
Governments in the ASEAN region are generally supportive of expanding businesses, offering a range of incentives including free trade agreements, competitive tax rates and tax rebates. With Indonesia’s corporate income tax due to be decreased in 2022[i], Singapore being known for one of the lowest corporate tax rates in the world, and the simplified tax system in Hong Kong, the governments of several Asian countries can boast of business-friendly taxation policies.
Australian businesses are especially well-positioned to take advantage of the numerous free trade agreements established across the region. Last year both the Australia-Hong Kong Free Trade Agreement[ii] and the Indonesia-Australia Comprehensive Economic Partnership Agreement[iii] came into force, providing new opportunities for businesses. What better time than now to take advantage of these fiscal incentives?
With harsh market conditions in many parts of the world, the need for new customers and strong partners has never been more critical — and Asia is rife with opportunity. When formulating an Asian expansion plan, it is essential that companies tap local business partners. This allows for low-risk expansion into the region and provides the ability to create a more significant impact quickly and with limited resources whenever you are ready to expand your business into ASEAN.
Gemstar is here to act as your growth and expansion partner, ready to help your business find its feet in Asia and take advantage of these timely opportunities. To learn more about how Gemstar can help, you can contact our team here.