Southeast Asia’s Consumer Powerhouse
August 12, 2016 | HSBCEstimated reading time: 2 minutes
Don’t underestimate the ASEAN consumer. Yes, there are only about half as many of them as there are in China or India. And the typical shopper in the 10-member Association of South East Asian Nations is not as wealthy as those in Europe.
But ASEAN’s 620 million-plus inhabitants are an increasingly powerful source of global demand, and a potential game-changer for companies that are looking for growth in a tough and uncertain global environment.
ASEAN has come a long way in a short time. Spanning countries as diverse as Singapore, Vietnam and the Philippines, the region has gone from being primarily a hub for manufacturing cars, electronics and other goods to being a market for those very goods.
China’s Belt and Road initiative is expected to inject political momentum and financing into many projects in the coming years
Visit the airports in Bangkok, Manila and Jakarta, and you’ll find them bustling with Malaysians, Indonesians, Thais and Filipinos who just a decade or two ago could not have dreamed of enjoying an international holiday.
ASEAN is not an easy market to tap, however. It spans a wide array of religions, cultures and languages, multiple political systems, and varying levels of economic development. GDP per capita in Singapore, for example, is roughly 50 times that of Cambodia, and 16 times that of Indonesia. Internet penetration in Singapore is excellent; in Myanmar, it is almost non-existent. A one-size-fits-all business approach is not a recipe for success.
At the same time, the region is sprawling and physically disjointed. Infrastructure links in many parts of Southeast Asia remain underdeveloped or overloaded. All this means that ASEAN’s enormous potential – and consumption power – is often still not fully appreciated.
A number of factors support ASEAN’s growth prospects. Infrastructure links are improving. China’s Belt and Road initiative is expected to inject political momentum and financing into many projects in the coming years.
The recently-formed ASEAN Economic Community (AEC) is gradually liberalising the flow of goods, services and capital, smoothing cross-border activities for companies doing business within this dynamic region. Full implementation of the liberalisation reforms envisaged under the AEC could lift regional GDP by 5 per cent by 2030, according to HSBC estimates.
ASEAN consumers are growing in numbers, but also becoming more urbanised and better connected. Increasing internet connectivity is making it possible for large swathes of Southeast Asia’s population to access goods and services that were once beyond their financial and physical grasp.
Take financial services. The World Bank estimates that about two-thirds of people in Indonesia, the Philippines and Vietnam, and about one in five of those in Malaysia and Thailand, currently have no banking relationships. Improving internet connectivity and the introduction of digital banking technologies will allow tens of millions of people to access savings, loans, investment and insurance services for the first time.
ASEAN is not an easy market. But its consumers represent a rare bright spot in the global economy – and a prize worth going for.
Suggested Items
SPEA Expands in Southeast Asia with New Subsidiary in Thailand
05/17/2024 | SPEASPEA, a global leader in automatic test equipment for the manufacturing of semiconductor, microelectronic and electronic devices, today announced the opening of its new subsidiary in Thailand. This expansion marks a significant step forward in SPEA's commitment to serving the growing Southeast Asian microchip and electronics market with leading-edge manufacturing machinery and equipment.
PCB Market Size to Grow by $29.06B from 2024-2028
05/17/2024 | PRNewswireThe global printed circuit board (PCB) market size is estimated to grow by USD 29.06 bn from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of over 6.6% during the forecast period.
AT&S 2024/25 on Growth Course Again
05/17/2024 | AT&SAT&S operated in a challenging market environment in the financial year 2023/24. After a strong second quarter, demand was relatively weak again in some market segments in the second half of the financial year.
Shipments of OLED Monitors Hit 200,000 Units in 1Q24, Annual Forecast to Reach 1.34 Million
05/17/2024 | TrendForceTrendForce’s latest report reveals a robust start to 2024 for OLED monitors, with shipments reaching approximately 200,000 units in the first quarter—marking a YoY growth of 121%.
Magnachip Celebrates the Grand Opening of Magnachip Technology Company in China
05/16/2024 | MagnachipMagnachip Semiconductor Corporation celebrated the opening ceremony of Magnachip Technology Company, Ltd. (MTC) yesterday at its headquarters located in Hefei, China. MTC is a subsidiary of Magnachip, established on December 20, 2023, to expand the Company’s display driver IC and power IC businesses in China.