HSBC: PH is a key target for companies looking to enter SEAsia

New research commissioned by HSBC Commercial Banking shows that international companies in nine major economies are increasingly optimistic about their growth prospects in Southeast Asia. They expect sales in the region to grow 23.2 percent in the next 12 months, up from 20.1 percent in last year’s survey, and between 4 and 5 times the GDP growth rate expected in the Southeast Asian.

The HSBC Global Connections survey also reveals that the Philippines, touted as “Asia’s rising tiger”, is a key target for companies looking to enter the Southeast Asian market, while those already having operations in the Philippines said they planned to prioritize the expansion of its operations there. the next two years.

“These findings confirm what we have been seeing from our own clients: that companies around the world are increasingly confident in growing in Southeast Asia, especially in the Philippines,” said Sandeep Uppal, president and CEO of HSBC Philippines.

“We are on fertile ground and are as excited as our clients about the growth prospects of the Philippines and Southeast Asia and focused on connecting local and international businesses in this dynamic region with opportunities around the world.”

The survey reveals a stark difference between the M&A ambitions in Southeast Asia of respondents from Asia Pacific and those from other regions. Twice as many respondents from China (65 percent) are more likely to significantly increase inorganic growth in Southeast Asia by 2024 than those from Germany (45 percent), although respondents from all markets expect activity to increase in the next four years and the gap between Asian and non-Asian respondents narrows over time.

Respondents who are already present in the region plan to focus on growing in the markets they know. 36 per cent of companies operating in Singapore expect to prioritize growth there over the next two years, followed by 27 per cent of those with operations in Malaysia and 24 per cent of those with operations in Thailand. Companies in all markets except Germany are more likely to prioritize Singapore among their current markets, reflecting the country’s enduring attraction as a regional business hub and financial hub.

When it comes to new opportunities, Indonesia, Malaysia and the Philippines are the most popular choices for companies looking to expand into a new ASEAN market in the next two years. 25 percent of companies without a presence in Indonesia or Malaysia and 21 percent of those without a presence in the Philippines report plans to expand in those markets during that period.

The survey suggests that international companies continue to view Asean primarily in terms of its supply chain connectivity rather than as a consumer market, even though Southeast Asia’s gross domestic product (GDP) per capita has grown by 1,250 dollars in 2000 to 5,800 dollars in 2023, according to the International Monetary Fund.

The region’s skilled workforce (27 percent), growing digital economy (26 percent) and competitive wages (25 percent) are the top three attractions, while the growing middle class ranks ninth in terms of importance. However, companies identify talent as a challenge as well as an attraction: the cost of training (36 percent) and the lack of trained personnel to drive implementation (also 36 percent) are identified as the main challenges for companies seeking to digitalize their operations in Asean. Additionally, the ability to hire talent with the right level of experience (32 percent) is the main challenge to being more sustainable in the region.

When asked which technologies ASEAN is leading in, the largest number of respondents identified e-commerce (31 percent) and digital payments (28 percent), reflecting the widespread adoption of digital platforms and mobile wallets in many countries in the region.

“Southeast Asia is clearly an attractive manufacturing base, with increasingly advanced supply chains and a highly skilled workforce attracting global companies to the region,” Uppal said. “But the consumer story is also something international companies need to pay attention to as digital adoption and domestic purchasing power grow. This is particularly true in the Philippines as the country stands out for its three ‘G’s: growing economy; growing population; and increasing trade liberalization,” he concludes.