Southeast Asia has the world’s attention as it has become one of the biggest growth markets. It has consistently had high GDP growth rates and favourable economic policies in recent years. If treated as a single unit, the ASEAN countries’ GDP is the fifth highest globally, just behind Germany.
It plays a crucial role in the overall APAC business landscape and is becoming a significant global political voice. A recent ground-level survey and research conducted by FedEx Express shed more light on how businesses perceive the region’s economic prospects and how many now consider Southeast Asia as a top-growth market.
Here are the top 5 investor trends supporting Southeast Asia’s tech hub growth
Let’s take a deeper look at the research findings.
Southeast Asia’s growth outlook
In collaboration with Forbes Insights, FedEx Express surveyed 250 small and medium-sized enterprises. These founders and C-level executives operate in a vast array of industries and sectors, providing a representative focus group.
The research aimed to identify three critical international growth trends within the Asia-Pacific region for the next three years and positioned itself to identify growth opportunities for SMEs and recognise challenges to cross-border business.
One of the primary findings of the research was that 68% of respondents consider the Southeast Asian region, which includes countries such as Singapore, Indonesia, Thailand, and Vietnam, to be the most promising opportunity for growth.
Domestic economic growth and cultural affinities allowing for favourable trade deals fuel the region’s growth potential. An incredible 88% of business leaders planned to expand their customer base in the Southeast Asian region. Many APAC leaders expressed that it is easier to do business in Southeast Asian countries than in Europe, North America, and South America. This ease of doing business may be due to higher cultural affinities with regional partners, suppliers, and customers.
Challenges to potential growth
While the region has high potential, challenges to leverage it remain formidable for its business leaders. Southeast Asian regulators have implemented highly complex customs requirements. Half the survey respondents cited documentation and regulatory processes as the most significant challenges to doing business in the area.
Another challenge businesses usually face when expanding across borders is finding new customers. Marketing a product created with a different customer base and ecosystem in mind can be difficult. The product must be translated or customised for a new and different customer base in an unfamiliar ecosystem.
Further, to succeed, businesses often need to find partners and create supply chains within a new geographical area. This reliance on others can be an especially difficult challenge due to diversity and trust barriers.
As detailed in the report, Asia Pacific businesses also have to compete with global competitors who are also aiming to enter the growing Southeast Asian market. Further, global economic headwinds also need to be overcome, something that many companies slowly recovering from the impact of COVID-19 may not be in a position to do.
The role of digital transformation
While there are many challenges, thankfully, there are also steps that businesses can take to alleviate them. The availability of innovative digital technology can make it easier for businesses to successfully enter new markets. Most business leaders (57%) said their highest priority was improving the customer experience. They believe introducing new tech-led processes to their business methods can be one way to achieve this.
Implementing new-age solutions such as analytics, AI, machine learning, real-time tracking, and other software can overcome several challenges. For example, integrating digital payment technology can help businesses directly improve convenience.
Even though digital transformation is a high priority for businesses, there are hurdles, such as the high cost of upgrading existing IT infrastructure, upskilling the workforce, training them to leverage newer methods, and developing and implementing a new digital strategy. Lastly, digital infrastructure must also be protected from security threats, which can be an additional issue.
Navigating challenges and moving forward
As industries in the APAC region contend with the new opportunities and challenges of 2024 and beyond, the FedEx report provides much-needed insights into how a broad cross-section of CEOs and business leaders are approaching their company’s expansion plans. It also sheds light on how intra-regional opportunities can be explored and the role that new-age technology can play in bridging barriers.
Further, businesses that can differentiate themselves from existing competition by introducing sustainable alternatives or communicating their commitment to the United Nations’ Sustainable Development Goals (SDGs) can tap into new markets as consumers grow increasingly environmentally conscious and wish to purchase ethically sourced products and services.
SMEs operating in the APAC business landscape can take heart from the fact that high levels of opportunity still exist within the region, and numerous tools are available to help them meet the challenges encountered. While wars and supply chain issues may impact the current global economic climate, there is still potential for growth.
Overall, the FedEx survey shows the potential for Southeast Asia as the top growth market of choice for APAC businesses wishing to expand into new territories.