The "get in on the ground floor" adage is almost cliche at this point.
So to suggest that Southeast Asia, with a population of nearly 685 million people, is a young up-and-coming market, might seem like a stretch.
Yet, despite the region’s apparent maturity, vastness, and diversity, there are some numbers that might surprise you.
The Association of Southeast Asian Nations (ASEAN) is one of the world’s fastest-growing regions, set to reach 741 million by 2035. Although population size is notthe only indication of economic potential, it is a decent metric to begin with.
Beyond population, economic growth sets Southeast Asian countries apart from the rest of the world:
- Since 2000, GDP growth has increased fivefold to over US$3 trillion in 2022
- By 2030, ASEAN will be the world’s fourth-largest economy.
- ASEAN citizens are moving up worldwide — its middle-class population is expected to grow to 396 million by 2030
- ASEAN is part of the Regional Comprehensive Economic Partnership (RCEP) free-trade agreement, the largest trading bloc in world history
- Most of ASEAN’s population is under 30, offering a youthful workforce that will serve for decades. That’s younger than the U.S. (40.8 years), Japan (46.5 years), and even China (36 years)
Now that we know the potential for growth in Southeast Asia is accurate and achievable, what are the most likely sectors to benefit, and how can businesses capitalise on them?
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We are seeing a convergence of digital and traditional markets that create new opportunities for local and international players.
In the banking sector, for example, we’re seeing an influx of fintech companies taking advantage of the region’s vast population of unbanked citizens to create innovative and profitable products.
That point cannot be underestimated — as digitisation expands its web amongst such a large and once-disconnected population, it leads to greater access to global markets, world-class products, and services.
Companies that can thrive in this evolving environment by thinking outside the box will be well-positioned to take a slice of the action.
To give some evidence of action, ASEAN is halfway through its five-year Digital Master Plan 2025 – an initiative designed to boost the region’s digital capabilities.
The Master Plan is a collaboration of all ten member states who have assigned specialist "Digital Ministers" to oversee eight specific goals.
It includes increasing the quality and coverage of fixed and mobile broadband infrastructure and increasing the capacity of businesses and people to participate in the digital economy.
Going green will be big business in Southeast Asia — the Monetary Authority of Singapore (MAS) predicts there will be US$200 billion per year of green investments in ASEAN countries by 2030.
Sustainability is becoming a priority for both government and businesses alike. Governments are introducing incentives for “green” activities, such as Indonesia’s issuance of 17 green, social and sustainability bonds worth $US7.7 billion, which will be used to finance renewable energy assets.
Companies capitalising on this shift towards sustainability will be well-positioned for long-term growth. Those able to invest in developing innovative green products and services will benefit from financial rewards and positive public reception.
Related Read: How Feasible Is Solar Energy in Southeast Asia? »
Technology advancement has significantly influenced the region’s growth.
Just 10 years ago, 80% of Southeast Asian countries had no internet access. Today, the mobile-first region has entirely skipped over many technological shifts to use the latest software and tools in the market.
It is also a hotbed for tech startups, with a total valuation of US$340 billion in 2020, which is expected to triple by 2025. These rapidly growing startups are also well-positioned to scale globally.
Businesses in the region are investing heavily in emerging technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT).
The Asia Pacific AI market, for example, is expected to grow at the compound annual growth rate (CAGR) of 40.8% from 2022 to 2027 — the highest growth rate in the world.
Opportunities for businesses to use AI, Big Data, and analytics to drive innovation are plentiful. This could be anything from using predictive analytics to forecast customer demand and tailor products accordingly or utilising chatbots to improve the customer experience.
Which Southeast Asian Country Should You Invest In?
Prospective investors will likely wonder where exactly to invest in Southeast Asia — after all, it is incredibly diverse.
An entrepreneur’s decision-making process will be impacted by numerous factors, including geographical location, infrastructure, market conditions and tax system.
One prime location is Singapore, which is reputed for its strong government support, low corporate tax rates, and high stability.
Singapore has also built robust trade connectivity via the ASEAN Economic Community (AEC) 2025’s far-reaching trade and investment-linked agreements.
The AEC Blueprint 2025 sees the association starting its next phase of economic integration for companies in ASEAN economies to grow their global reach and widen their ambitions.
Capturing Southeast Asia’s Business Opportunities
As a region brimming with business opportunities, Southeast Asia is where many global companies call home. Several Southeast Asian countries, especially Singapore, are also well-poised to be regional hubs for multinational firms.
The bottom line is that Southeast Asia is transforming into an attractive destination for businesses of all sizes, with booming opportunities across multiple sectors.
All businesses must be prepared to embrace new technologies and capitalise on untapped markets to stay ahead of the competition. With the right strategies and investments, there is no limit to what success can be achieved in this dynamic region.
So yes, "getting in on the ground floor" might be an apt phrase for investing in Southeast Asia.
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These industries include:
- They can expand or set up new businesses in the region with the help of InCorp’s team of successful incorporation professionals
- Businesses can use technology and digitalisationto foster inclusive trade and become stronger, as well as reach new customers internationally