Enterprise Singapore CEO on how Singapore companies can capture opportunities in ASEAN
At the ASEAN Conference, CEO of Enterprise Singapore Mr Png Cheong Boon spoke about the opportunities in ASEAN and how Enterprise Singapore can support businesses to capture these opportunities.
3 growth opportunities for ASEAN
As ASEAN’s population is expected to increase from the current 640 million to more than 710 million by 2030, the growing demand from a young population which is “hungry for jobs, goods and services” and represents what Mr Png called “exciting prospect for enterprises looking to grow their business”.
Other than a young population, the number of households in ASEAN earning more than S$10,000 per year is projected to reach 125 million by 2025. About 30% or 40 million of these will earn between S$25,000 and S$95,000 a year.
While the top spending categories of ASEAN consumers include travel and leisure; health, beauty and wellness; fashion; and consumer electronics, the consumer market also shows diversity in spending areas. For example, outside of capital cities, penetration of foreign brands is whilst generally low, is growing, as consumers are looking beyond functionality and are concerned about safety, energy efficiency and good design.
The same trend is also observable in field of infrastructure. The Asian Development Bank (ADB) estimates ASEAN’s annual infrastructure investment needs at US$184 billion to expand networks of roads, rail, ports and airports to facilitate the movement of people and goods.
“Given the high cost of such infrastructure, Southeast Asian governments are turning to external financing to meet some of these commitments. More projects will be delivered as public-private partnerships (PPPs),” said Mr Png.
“PPPs will bring in private capital and expertise, but are more complex to structure. This creates opportunities for engineering, legal and financial services firms with experience in preparing commercially-viable infrastructure PPPs,” he explained.
E-Commerce and the digital economy was named by Mr Png as the third area of growth.
According to Mr Png, the region’s online economy is projected to be worth more than US$200 billion by 2025, growing at a 10-year compound annual growth rate of 27%. By then, it will account for 6% of the region’s GDP, three times today’s contribution.
He pointed out that business-to-consumer (B2C) e-commerce platforms is the fastest growing pillar of the internet economy, expected to grow eight times to US$88 billion by 2025.
“As more consumers go online, there will be new possibilities to deliver more services online,” he said.
3 ways Singapore companies can capture the opportunities
Mr Png highlighted 3 opportunities for Singapore companies.
The first one lies in platforms. He noted that most e-commerce marketplaces have grabbed most of the attention but other verticals, such as education, entertainment and healthcare, remain underdeveloped.
In supporting services, online commerce and services require many of the same services as the real economy. These include payments, insurance, logistics and fulfilment, fraud detection, marketing and customer service.
In supporting infrastructure, Mr Png pointed out that the digital economy will still depend on many brick and mortar services, such as fulfilment centres for e-commerce, data centres and logistic infrastructure.
To tap these opportunities, he emphasised that companies “must adopt market-specific strategies” by: (1) customising products for the market, (2) working through the right channels to reach the customer, and (3) choosing the right partners.
The role of Enterprise Singapore in supporting Singapore companies
“Today, more than half the 7,000 MNCs here run their Asia-Pacific business out of Singapore, taking advantage of our strong transport and trading links; the presence of global financial and professional firms that are familiar with the region, and the availability of a diverse talent pool that is familiar with doing business in ASEAN. Similarly, Singapore companies can leverage the availability of finance and trading infrastructure, as well as talent network to help them venture into the region,” said Mr Png.
In fact, Enterprise Singapore as Singapore’s enterprise development agency, has been work closely with stakeholders and partners and put in place a range of assistance that can help Singapore companies ease their entry into other ASEAN markets.
There are programmes such as: (1) the Plug & Play Network (PPN) which offers a list of in-market advisors, business matching partners and co-working spaces for quick set-up, (2) eight overseas centres in ASEAN to help companies identify suitable local partners, and (3) the Market Readiness Assistance (MRA) Grant to help companies set up office or conduct feasibility studies when expanding into new markets.
To preparing Singapore companies, business people and students to ride the fast-growing digital economy in ASEAN, Enterprise Singapore, together with the Economic Development Board, has launched the Global Innovation Alliance (GIA) network in Jakarta and Bangkok.
The GIA network connects Singapore startups to the local innovation and business community, enables partnerships and facilitates market access, and this in turn creates opportunities for entrepreneurs and students to be exposed to these markets.
Mr Png also mentioned Infrastructure Asia which is jointly set up by the Monetary Authority of Singapore and Enterprise Singapore to bring together the networks and capabilities of public sector agencies, engineering firms, global and multilateral financial institutions, and global professional services firms, to help catalyse more infrastructure projects to meet Asia’s infrastructure needs. He said that more details on Infrastructure Asia’s programmes will be shared later this year.
On developing Southeast Asia-ready talent, Enterprise Singapore has been working hand-in-hand with companies and partners to roll out various talent development programmes such as the Go Southeast Asia Award, which matches undergraduates keen on regional careers to Singapore companies providing internships in their operations in Southeast Asia, and the Professional Conversion Programme (PCP) for mid-career professionals looking for a new regional career
“Southeast Asia represents a significant growth market for companies and increasingly, also a source of innovation. To tap these opportunities, companies need to develop a better understanding of these markets, tailor their products and solutions to these markets, and work with local partners. Enterprise Singapore has put in place several programmes to assist Singapore enterprises in this aspect, and will step up our efforts to do so. We hope more Singapore companies especially SMEs will leverage on these programmes as they venture into ASEAN,” My Png concluded.