International businesses are increasingly optimistic about their prospects in Southeast Asia, expecting regional sales growth of 23.2% over the next 12 months, according to a survey commissioned by HSBC Commercial Banking. This figure is an increase from the 20.1% growth expectation recorded in last year's survey and is four to five times the rate of GDP growth expected in Southeast Asia, underscoring rising confidence among international companies.
The HSBC Global Connections survey, conducted between July 25 and August 2, involved key decision-makers from over 3,500 companies with sales of at least $5 million and commercial interest in at least one ASEAN market. Respondents were based in various locations including China, India, the United Kingdom, France, Germany, the United States, Australia, and the Middle East.
Companies based in Asia-Pacific countries and the Middle East displayed more advanced presence and greater ambition for regional expansion than their European and American counterparts. Approximately 65% of Chinese respondents planned to significantly boost their regional growth through mergers and acquisitions (M&A) by 2024. In comparison, less than 50% of respondents from the United Kingdom, France, and Germany had similar plans.
Companies already operating in the region intend to focus on markets they are familiar with, such as Singapore, Malaysia, and Thailand. For new opportunities, Indonesia and Malaysia emerged as popular choices for businesses looking to expand into a new ASEAN market within the next two years.
Regina Lee, head of commercial banking at HSBC Singapore, noted that these findings align with increased funding, trade financing and payment activities observed among the bank's global clients in the region. HSBC has been scaling up its team and enhancing banking and digital capabilities to support global businesses pursuing growth opportunities in Southeast Asia.
The survey also highlighted Singapore's attractiveness for business expansion due to its skilled workforce, growing digital economy, developed infrastructure, supportive government and regulatory environment, and supply-chain connectivity. The country's advanced communications infrastructure provides a strong foundation for further growth into the region.
The survey further revealed that international businesses view ASEAN primarily in terms of its supply chain connectivity rather than as a consumer market. The region's skilled workforce (27%), growing digital economy (26%) and competitive wages (25%) were identified as top attractions. However, businesses also identified talent as a challenge as well as an attraction: the cost of training (36%) and lack of skilled personnel to drive implementation (also 36%) were identified as top challenges for businesses seeking to digitise their operations in ASEAN.
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