In world riven by conflict and economic uncertainty, leading brands are increasingly attracted by the flourishing markets of Southeast Asia. While war rages in Eastern Europe, and the US and China are at political and economic loggerheads, Southeast Asia is quietly getting back on track as we emerge from the restrictions imposed by the pandemic.
Southeast Asia has seen consistent positive development since the end of the Cold War. When the US withdrew from Vietnam in 1975, Southeast Asia was an economic basket case. Conflict continued to haunt the region, with fighting in Cambodia, Laos, Indonesia, Thailand and the Philippines continuing for several years, making its subsequent recovery all the more remarkable.
A crucial development was the establishment of ASEAN – the Association of Southeast Asian Nations – in 1967. This body is sometimes derided as a talking shop, but in fact its doctrine of non-interference and mutual support has underpinned extraordinary growth across a group of highly diverse nations. It is evident that the founders of ASEAN showed great vision and determination in establishing what is probably the developing world’s most successful inter-governmental organisation.
Politically, ASEAN does a great job of managing the difficult balancing act between the US and China, as both superpowers have strategic interests in the region. In the economic sphere, the grouping has overseen a steady alignment of regulations that are facilitating cross-border trade and investment. Effectively, ASEAN is a platform for its member nations’ economic growth, social progress and cultural development, promoting regional peace and stability.
ASEAN’s population today numbers more than 660 million. Although it is beginning to show a trend of aging, particularly in Singapore, 34 percent of the population is young, aged between 15 and 34. These young people are extremely technologically savvy, culturally confident, keen consumers, interested in the latest trends, open to new ideas. At the same time, the influences of their various cultures, whether Buddhist, Confucian, Christian or Muslim, continue to put great emphasis on the traditional values of education and respect for parents and elders.
There are of course issues within the ASEAN family, notably the ongoing civil unrest in Myanmar, and Cambodia’s flirting with China. But the fundamental factors of political stability and economic development mean Southeast Asia continues to be a market that not only cannot be ignored, but that offers a growth path for brands that find themselves standing still in Europe and the US.
All modern economies depend on the adoption of technology, across every sector from government to retail. Southeast Asia is no exception, and the region’s technology footprint is a perfect indicator of its market potential. A recent report by Temasek, Bain and Google found that the region is on the path to become a $1 trillion digital economy by 2030. Even before that landmark is reached, the report estimates that Southeast Asia’s digital economy will grow to around $360 billion by 2025, outgrowing the earlier projection of $300 billion.
A number of findings in the report show that the pandemic accelerated the adoption of digital solutions, by vendors as well as by consumers. Southeast Asia’s small and medium enterprises are shown to have turned to digital platforms to survive the pandemic, with digital financial services emerging as critical enablers. At the same time, 80% of the region’s 440 million internet users are digital consumers. They are using more digital services and spending more across most vertical sectors, including e-commerce, online media, transport & food, online travel, digital financial services, healthtech and edtech.
From the investment perspective, the report highlights a sophisticated market that saw 11 new consumer technology unicorns arise in 2021, bringing the total number to 23. It says more tech companies are exploring IPOs to raise capital or allow a profitable exit for early investors.
The report examines these sectors in each of the markets of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. In all cases the sentiment is positive, and it is worth emphasising that the fundamental factors in play ensure Southeast Asia is no bubble – it is a market for now and the future. The report makes clear that brands which decide to explore the region’s potential will find a commitment to sustainability, business-friendly data regulation, data infrastructure to support larger and more frequent data flows, and a keen focus on innovation.
None of these positive findings come as a surprise to us at Priority Consultants. This region is our home, and has been for the last 37 years. We support clients right across Southeast Asia and India and today our Priority people are in eleven cities in Singapore, Malaysia, Thailand, Indonesia, Philippines, Vietnam and India. We are locals – the cultures and languages of the region are our own, and we know what is really going on. Combined with our domain knowledge and proven methodology, this ideally positions us as trusted advisors for our clients.
We are more confident in the future of Southeast Asia than ever, and we look forward to bringing you with us on a journey into an exciting future.