ASEAN Countries Are Selling. Are You Buying?

In pursuit of the opportunities of globalized business, many countries want to become a part of the trend to varying degrees. This article is an overview of some structural challenges and opportunities to unlock business opportunities in Southeast Asia. Content for this article was gathered at the February 2014 symposium, “New Markets for Germany and Japan in Southeast Asia,” hosted by the Japanese-German Center, Berlin, and sponsored by the Fujitsu Research Institute and the German-Asia Pacific Business Association. The symposium resembled a bustling, outdoor marketplace in which various business and academic vendors called attention to their fine and fresh goods and services. In consideration of this readership, the take-aways shared below are global-general, and not German and Japan-specific.

Discovering „New Markets” in Southeast Asia

According to the official website of the Association of Southeast Asian Nations (ASEAN), the first of seven aims and purposes set out by the ASEAN Declaration (also know as the Bangkok Declaration, 1967), is “To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership…”. Member countries include Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei Darussalam, Myanmar (Burma), Cambodia, Laos and Vietnam. According to some sources, if ASEAN were a single entity, it would rank as the 8th largest world economy.Facts and figures were in abundant supply at the “New Markets” symposium. Their interpretation is open for debate. However, one clear omission from the agenda was the topic of the cultural complexities of exchanging business with and between ASEAN countries; these were topics that were ripe and ready for discussion. During a Q&A portion of the symposium, an intercultures team member in attendance asked the panel what insights they might share about key cultural competencies needed to establish and maintain successful business in Southeast Asian countries. A request to clarify the question was followed by responses that were communicated indirectly, at best. It became apparent that the intercultural competencies with which to conduct sustained, relationship-based global business with emerging markets was a separate topic for a different day. The following are select extracts from a few of the day’s presentations, including those on Indonesia, Thailand and China.

Insights on Indonesia

Insights on Indonesia were shared by Prof. Dr. Wijayanto Samirin of the Paramadina Public Policy Institute, Jakarta, in his presentation on “Reform and Opportunities in the Indonesian Market”:

• Relatively less reliant upon external markets. Indonesia is less reliant upon external markets than its ASEAN counterparts and other countries. Exports represent 24% of Indonesia’s Gross Domestic Product (GDP). According to data sourced from the World Bank Development Indicators (2013), China’s exports represent 25% of GDP; exports in the Philippines and the UK represent about 30% of their respective GDPs; and Singapore’s exports represent 201% of GDP.
• Open to foreign investment. In Indonesia, up to 99% of the banking sector, 97.5% of the mining, oil and gas sector, and 95% of the electricity sector, for instance, may be owned by foreign investors.
• Significant earnings in Foreign Direct Investment. Between the years of 2009-2012, Foreign Direct Investment (FDI) to Indonesia has increased annually. Compared to its ASEAN counterparts, Indonesia received about US$10 billion more in FDI than the ASEAN country with the next-highest FDI. Prof. Dr. Wijayanto pointed out that FDI in Indonesia has increased despite the 2008 global financial crisis, first declining from US$9.3 billion (2008) to US$4.9 billion (2009), and then swinging from US$13.8 billion (2010) to US$19.2 billion (2011) and finally to US$19.9 billion (2012).
• Young population. The median age in Indonesia is 27.9 years old. The meaning of this data can be interpreted, in part, by comparing it to a median age of 44.6 years in Japan; 39.6 years in Singapore; 36.9 years in the U.S.; 33.7 years in Thailand; and 22.7 years in the Philippines (CIA World Factbook).

Insights on Thailand

Insights on Thailand were shared by Prof. Dr. Suthiphand Chirathivat of Chulalongkorn University, Bangkok, in his presentation, “ASEAN Market Integration and Corporate Strategy form a Base in Thailand”:

• Speculation of increased debt among Thai households. Populist macroeconomic policies have been established in an effort to stimulate consumption in Thailand. Examples of such policies include the first-car policy and increased ease in obtaining credit through state financial institutions (Suthiphand Chirathivat and Kornkarun Cheewatrakoolpong (2013)).
• China invests in Thailand. According to the BOI, the Chinese are the second-largest foreign investors in Thailand after the Japanese. In 2013, Chinese firms invested US$14 billion in Thailand.
• Rising infrastructure. In March 2013, Thailand launched a three-pronged, 2.2 trillion baht strategic plan to escape the so-called “Middle Income Trap,” reduce economic inequality and create environmental sustainability (Pattama Teanravisitsagool (2013); Suthiphand Chirathivat and Kornkarun Cheewatrakoolpong (2013)).
• Varying degrees of Thai regional growth. In the five years between 2007-2011, the GDP of Bangkok and its vicinities grew at a rate of 33%; the GDP of Thailand’s Northern region grew at a rate of 57%; and, the GDP Northeastern region of Thailand grew at a rate of 58% (National Statistical Office of Thailand).

Insights on China

Insights on China (which is not an ASEAN country) were shared by Dr. Jianmin Jin of the Fujitsu Research Institute, Tokyo, in his presentation, “Market Integration in Asia’s Greater China Market”:

• China saves funds needed for growth. In 2008, households in China saved at a rate of 31.2%; households in Singapore saved at a rate of 32.9%; households in Malaysia saved at a rate of 17.7%; and, India, Indonesia, Vietnam, the Philippines and Thailand saved at single-digit percentage rates (METI in Japan; World Bank).
• Student and skills exchange between China and ASEAN countries. In a comparison of 2012 data between China and Japan, more international students from Thailand, Indonesia, Vietnam, Malaysia and Singapore studied in China than in Japan. Select examples include 16,700 Thai students in China and 2,200 Thai students in China; 13,100 Indonesian students in China and 2,300 Indonesian students in Japan; and, 4,200 Singaporian students in China and 211 Singaporian students in Japan (numbers rounded) (MEXT in Japan; MOE in China).
• Alliances between China and ASEAN countries through Foreign Trade Agreements (FTA). China ranks among the top three countries with which Indonesia, Malaysia, Thailand, Vietnam, the Philippines and Singapore both export and import. For instance, China ranks as the second-most country to which Indonesia exports, and the topmost country from which Indonesia imports (IMF, no year cited).

Open Questions for Consideration

Given the facts and figures presented above, the following are some questions for consideration on the relationship between the data and the everyday realities of working across national, regional, generational and other cultures. When working in a competitive global marketplace, how does cultural competence impact your business advantage?

• In competition with other foreign interests in ASEAN countries, how will the way that you collaborate with your Southeast Asian counterparts sustain your business ventures in the region?
• If working with people in regions  of Southeast Asian countries that are less metropolitan, but that represent greater GDP growth than more mainstream regions of the country, how will you learn and understand local business practice?
• How is the Millennial generation in Southeast Asian countries differently-motivated in the workplace than Millennials in your country location?
• What emerging global leadership skills might you seek in adult students who have graduated from their studies and are seeking work?
• What value-add do you offer to the economic alliance between ASEAN countries in the way that you deliver services and products?

Continue the discussion. Share your comments with the intercultures e-newsletter Editor for publication (as you like) in an upcoming edition.

The above article was included in the Feb. 2014 intercultures e-newsletter.

Photo credit title photo: Getty Images.