In recent times ASEAN countries have built a reputation on their confident export forecasts. However, H1 2021 saw export intentions unchanged at 43% while other regions anticipated acceleration in exports over the next 12 months.
The number of ASEAN firms expecting to increase employees focused on non-domestic markets eased from 35% to 33%. The Philippines was the only country in the bloc that saw the number of businesses anticipating a material increase in internationally focused employees, rising from 36% to 40%.
These more muted export intentions are possibly temporary. Jonathan Donde, director of strategic growth market development at Grant Thornton International Ltd., says: "ASEAN countries are expected to be beneficiaries of regional trade tensions between China and Australia, in the same way that countries such as Vietnam were beneficiaries of the US/China trade war. Coupled with large regional trade agreements that have been signed, you'd think export optimism would be higher at this point."
Due to resurgent COVID-19 cases in the region, businesses investment intentions have only modestly increased when compared with H2 2020. Technology was a notable exception, with the number of businesses expecting to increase investment climbing seven percentage points to 56%. Indonesian businesses are most bullish, with 66% of mid-market firms intending to boost their technology spending.
Technology is increasingly seen as an enabler for internationalism, both for exporting and making FDI easier in local economies, something ASEAN countries have successfully focused on recently. Robert Hannah says: “Countries like Vietnam, which have probably used China as a stepping stone to the global economy, are maybe feeling a bit more emboldened because of technology. Businesses are asking themselves: ‘Why don’t we go direct to the global market?’ They have an increasingly educated workforce, and technology is showing them that they can go to any place in the world.”
A recent survey by Standard Chartered in ASEAN revealed that intra-region investment was on firms’ agendas – with Singapore, Thailand, Vietnam and Indonesia the most favoured nations for expansion and investment.[iv]
Robert Hannah adds: “The region should be pushing ahead in investment. It’s got the opportunity to build serious manufacturing and production capability, invest massively in technology, digital and data, and could set itself way ahead of the rest. But there’s a slightly cautious culture among the large proportion of family-owned businesses within the group that may be holding back investment.”
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