Vietnam is among the top destinations for expansion for ASEAN companies seeking growth opportunities in the 10-nation bloc, according to the latest survey. 

A survey commissioned by Standard Chartered for its “Borderless Business: Intra-ASEAN Corridor” report revealed that 59% of the surveyed respondents are focusing on expanding in Vietnam to capture sales and production opportunities, besides Thailand (60%) and Singapore (80%).

Hanoi is a city of Vietnam-where ASEAN firms expect robust business growth in the next 12 months. Photo: CapitaLand

The survey underlined the majority of ASEAN companies focusing on intra-regional opportunities expect robust business growth in the region over the next 12 months. 

Michele Wee, CEO of Standard Chartered Vietnam, said: “Vietnam continues to offer appealing business and investment opportunities given its strong fundamentals: robust economic growth, a sizable domestic market, low labor costs, an abundant workforce, free trade agreements, and strategic location.”

Access to the large and growing ASEAN consumer market (69%) and a global market enabled by a network of Free Trade Agreements (59%) as well as the availability of an abundant and skilled workforce (49%) was among the most important drivers for expansion across the region, according to the senior executives of the surveyed ASEAN companies. 

In addition, with the Regional Comprehensive Economic Partnership (RCEP) expected to attract more investments into ASEAN, all respondents said that they are planning to increase their investments over the next 3-5 years.

The survey also showed the number of companies that have recognized a wide range of risks in the region. The three main risks identified are the Covid-19 pandemic or other health crises (75%), geopolitical uncertainty and trade conflicts (60%), as well as the slow revival of the economy, and the drop in consumer spending (49%).  

Chart: Key drivers for focus on ASEAN and major economies offering expansion opportunities, Standard Chartered

The surveyed leaders also agreed that adapting their business model to industry practices and conditions within ASEAN (67%), building relationships with suppliers and adapting supply chain logistics (66%), as well as understanding regional regulations, payment methods and infrastructure (53%) are the most significant challenges they anticipate in the next 6-12 months.

To drive resilient and rebalanced growth in ASEAN and to mitigate these risks and challenges, the surveyed executives identified entering new partnerships/joint ventures to increase market presence (53%), driving sustainability and ESG (Environment, Social and Governance) initiatives (53%) and executing digital transformation programs (52%) as the most important areas for their companies to focus on. 

To support their growth, these companies said they are seeking banking partners with strong cash management capabilities (52%), one-stop corporate financing and capital-raising services (52%), and extensive trade financing services (47%). 

This was the third edition of the Borderless Business series for 2021 conducted by Standard Chartered.