ASEAN rising: four unique trends shaping a dynamic market

In the lead-up to the Special Summit, we engaged over 2,500 organisations and individuals nation-wide, to dive into what the tremendous changes underway mean for Australian businesses.

Four big picture trends surfaced.

ASEAN is becoming a common market, but each country has distinct strengths

ASEAN officially launched its Economic Community (the AEC) in 2015, marking an important economic and political commitment to the region’s shared and connected future.

The AEC is still a work in progress, but it has made solid progress towards promoting the seamless movement of goods, services, capital, people and communication. Tariff barriers have been removed across the six largest member countries, and short-term travel has become easier.

Progress has varied by sector, with some more integrated than others, but the impacts of the AEC are real and far-reaching.

The AEC is having “fundamental implications for Australia,” Auscham ASEAN President, Fraser Thompson says. 

“It is important to understand how economic integration will impact your business.”

Each ASEAN country has distinct and complementary strengths. Singapore is renowned for its financial services sector; Thailand has built a strong manufacturing industry, Malaysia and Vietnam have established ICT hubs and Myanmar can provide access to expanding pools of labour.

Take leading biotechnology company, Cochlear. Cochlear has established an ICT centre in Kuala Lumpur to tap into Malaysia’s deep pool of skills and its business-friendly climate, to grow a global support service.  

The digital economy is transforming all aspects of business

ASEAN is undergoing a rapid and unprecedented digital transformation, driven by rising consumer classes, cheap and accessible devices, and youthful, tech loving populations who have embraced e-commerce and social media.

Boosted by local successes like Sea (formerly Garena), Go-Jek, GrabTaxi, Lazada, Razer and Tokopedia, Southeast Asia’s start-up landscape has grown exponentially. Google estimates there are now more than 7,000 digital start-ups across the region.

E-commerce is projected to grow at 14 per cent over the next five years, compared with only four per cent in China.

These technologies are revolutionising how people go about their daily lives. This means businesses need to seriously rethink how they engage with consumers in these markets.

As Victoria’s Minister for Innovation, Philip Dalidakis, says, “with its strong start-up sector, investment from multinationals and growing economies, [ASEAN] is a launch pad from which businesses from across the world can vault into new markets.”

Stone and Chalk, a Sydney and Melbourne based fintech start-up hub, is a good example. It recently partnered with Jakarta based UnionSPACE, to enable its users to utilize co-working spaces across Jakarta, Manila and Kuala Lumpur.

Consumer preferences, demands and tastes are evolving rapidly

With rising disposable incomes and an expanding digital economy, ASEAN’s consumers are transforming how they spend their money.

The region’s considerable economic diversity means it is essential to look at country and market-specific opportunities.

ASEAN’s new consumers are urban and young. They increasingly desire premium, high-value products, not just stable commodities.

Australia’s high quality, safe food, dairy and agricultural industries are well placed.

University of Queensland’s Professor of Value Chains, Alice Woodhead, describes the new, “fusion markets” for agrifoods that are emerging amongst ASEAN’s millennials, as they opt to adapt more western cuisines into traditional diets.

“Most Australian marketing is pitched at educating Asians to eat traditional Australian foods. We are not grasping this fusion opportunity enough, or developing products that meet the demographic needs,” Professor Woodhead says.

Knowledge economies will drive service-sector growth, especially international education

Given the demographic and economic changes reshaping the region, Australia can be a trusted partner to Southeast Asia as the region grows its knowledge economies.

Take international education, for example.  

Currently, around 100,000 Southeast Asian are studying in Australia. But to realise this full potential, we need to refine and develop a niche value proposition, based on high-quality student experiences, that is adapted to ASEAN’s diverse education needs.

Better understanding and aligning this offering with the strategic priorities of key industries in each distinct ASEAN economy is a key piece of this picture. For instance, Indonesia is transforming its university sector and seeking to upskill thousands of academics (to masters and PhD level) across multiple disciplines.  Australian universities can be partners of choice in this project.

Obviously, relationships are at the core of developing knowledge economy and education-based partnerships. Australia has a natural asset in the nearly one million Australians of Southeast Asian ancestry.

Bright & connected future

A 2017 survey conducted by Auscham ASEAN found around 90 per cent of Australian businesses in ASEAN plan to increase their investment in the region within the next five years.

This week’s Special Summit provides added momentum for Australia and ASEAN to continue to build a shared, prosperous and interconnected future.

It is now up to businesses to acquire the insights and tools needed to navigate shifting landscapes and distil diverse sector and market-specific opportunities. Doing so enables Australian businesses to partner with ASEAN on its remarkable rise.

To read more insights into the ASEAN Special Summit click here.

Megan Mulia is the Director of Research and Information at Asialink Business, Australia’s National Centre for Asia capability.

Asialink Business’ State of Nation ASEAN series received grant funding from the Australia-ASEAN Council.