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SUMMARY REPORT
SBF ASEAN OUTLOOK SURVEY
20182017
Commissioned by:
Foreword
SBF ASEAN Outlook Survey 2017/2018
Companies Expect Positive ASEAN Business Outlook Driven By High Growth Potential
Companies Are Keen To Expand Into ASEAN But Face A Mix Of Challenges
Low Awareness And Usage Of ASEAN Economic Community (AEC) and ASEAN Free Trade Agreements (FTAs)
Areas Of Support Needed In Expanding Into ASEAN
Key Survey Findings Takeaway
Information About The Survey Sample
About SBF
Index Pages
03
01
04
06
08
10
11
12
13
ForewordWe are pleased to share with you this summary report on the findings of the SBF ASEAN Outlook Survey 2017/2018. As Singapore assumes the role of the Chair of ASEAN in 2018, the Singapore Business Federation (SBF), in partnership with HSBC, commissioned the SBF ASEAN Outlook Survey 2017/2018 to gain deeper insights into Singapore-based companies’ interest in ASEAN.
The objective of the survey was to explore how Singapore companies are venturing into ASEAN, and as business partners, discover how both SBF and HSBC can support businesses navigate new markets and capture growth opportunities.
1,036 companies responded to the survey conducted from December 2017 to March 2018. 77% of companies indicated they are planning to expand in 2018-2019. Of these, 77% identified ASEAN as the target region, followed by China (22%) and South Asia (15%).
Within ASEAN, Indonesia and Malaysia are the priority markets to enter in 2018-2020, followed by Vietnam, Thailand and Myanmar.
The bulk of companies expressing interest to expand into ASEAN are from the wholesale and retail trade, manufacturing, financial and insurance, information and communications, and construction sectors.
More than 80% of the companies surveyed cited growth potential and ease of access to new markets as the top motivations for expanding into ASEAN. Customer proximity, cost efficiency and productivity, as well as brand development are complementary factors driving their internationalisation interest.
1. World Bank 2. OECD
Notwithstanding their interest, companies are also concerned about the uncertain economic and political conditions, difficulty in hiring Singaporeans for overseas jobs, lack of knowledge on market opportunities and customer requirements, difficulty in sourcing local operational support, and difficulty in getting permits and licences, as potential barriers to their internationalisation plans.
7 in 10 companies perceive that ASEAN Economic Community (AEC) integration will bring opportunities for them. Despite the general positive sentiment towards AEC, 2 in 5 companies feel they are inadequately informed.
It is promising to note that the ASEAN economy is projected to grow by 6.2%1 in 2018, as compared to the world GDP growth of 3.7%. ASEAN is also poised to maintain its growth momentum, averaging 5.2% per year from 2018 to 20222. 70% of the respondents indicated they are currently operating outside of Singapore. SBF is exploring how to bank on this extensive network of Singapore companies to help other Singapore companies to venture into ASEAN.
We hope that the findings from this survey will be useful to you. I would like to acknowledge HSBC who has sponsored this survey and all our member companies who have participated in this year’s survey. We have heard you through this survey. SBF will work closely with Government agencies and trade associations to step up our efforts to help companies venture into ASEAN through providing market entry advisory services, opportunities to garner business connections, as well as helping them better understand and leverage Singapore’s network of Free Trade Agreements.
Ho Meng KitCEO
SINGAPORE BUSINESS FEDERATION
01
03
SBF ASEAN Outlook Survey 2017/2018
Singapore assumes the Chair of the Association of Southeast Asian Nations (ASEAN) in 2018. To uncover key insights on Singapore companies’ sentiments towards ASEAN, the Singapore Business Federation (SBF), in partnership with HSBC, commissioned independent research advisory firm Spire Research and Consulting to conduct the SBF ASEAN Outlook Survey 2017/2018.
The survey, conducted from December 2017 to March 2018, collected views from 1,036 Singapore companies across all major industries.
Q: Outside of Singapore, which of the following markets is your company currently also present in?
Q: Outside of Singapore, which of the following markets is your company currently also present in?
Q: If your company currently has overseas presence in the ASEAN region, which market does your company have the following operations in?
Among the companies surveyed, 70% have overseas operations and of which, 75% are present in ASEAN (outside of Singapore). The top five ASEAN countries (outside of Singapore) where the companies currently operate in are Malaysia, Indonesia, Thailand, Vietnam and Philippines. The two most common modes of operation across ASEAN by these companies are distributor network and subsidiaries/ joint ventures (more than 60%).
n=1,036 n=728
n=548
Singapore
Outside of Singapore
30%
70%
ASEAN
China
North Asia(excl. China)
South Asia
Europe
Americas
Oceania
Middle East
Africa
75%
40%
30%
29%
26%
20%
17%
16%
7%
Malaysia
Indonesia
Thailand
Vietnam
Philippines
Myanmar
Cambodia
Brunei
Lao PDR
Markets Penetration of ASEAN Mode of Operations
87%
81%
80%
76%
74%
68%
63%
61%
57%
33%
40%
39%
40%
47%
43%
45%
49%
43%
31%
24%
28%
23%
25%
24%
18%
23%
8%
10%
7%
13%
14%
9%
7%
7%
6%
4%
2%
6%
6%
7%
8%
9%
4%
6%
6%
13%
12%
11%
9%
10%
12%
12%
14%
11%
Distributor / Client
Representative Office
Other Alliance / Partnership
Subsidiary / Joint Venture
Manufacturing Facility
Others
Current Operational Presence Regional Presence
Modes of Operations in ASEAN
8%
9%21%
10%
7%
3%
9%
13%
2%
04
COMPANIES EXPECT POSITIVE ASEAN Business Outlook Driven By High Growth Potential
Q: How important is the rest of the ASEAN region, excluding Singapore, for your company’s overall global strategy over the next 2 years?
Q: What is the outlook for your company’s overseas sales next year, specifically to the rest of the ASEAN region, excluding Singapore, as compared to this year?
ASEAN’s market of more than 600 million people, and almost US$3 trillion in combined GDP, represents vast opportunities for Singapore companies.
86% of the companies surveyed view that ASEAN is important for the company’s overall global strategy in 2016/2017. Looking ahead to 2018/2019, this proportion grows to 91%.
Moving forward, companies are also generally more optimistic about the business outlook in ASEAN. While 29% of companies expect an increase in ASEAN turnover in 2017/2018 as compared to 2016/2017, this proportion grows to 41% when it comes to expecting an increase in ASEAN turnover in 2018/2019.
Importance of ASEAN to Overall Global Strategy
n=1,036
2018 and 2019
2016 and 2017
9%
14%
9%
11%
32%
32%
29%
34%
14%
16%
Current and Outlook for ASEAN Business Performance
n=1,036
27%
32%
33%
30% 2%
6%
29%
41%
2016/17 versus 2017/18
2017/18 versus 2018/19
Very Important
Quite Important
Important
Slightly Important
Not Important At All
Increase
Decrease
No Sales in ASEAN
No Change
05
Q: Which of the following markets did your company in Singapore generate most of its sales / incur most of its expenses from in the past 5 years?
Q: Which of the following factors are your company’s motivations for expanding into the rest of the ASEAN region excluding Singapore?
83 Unsurprisingly, the top 5 sources of sales come from Malaysia, Indonesia, Thailand, Vietnam, and Philippines.
An overwhelming majority (92%) cites the growth potential of ASEAN as the top motivation for expanding into the region.
of the Singapore companies surveyed generate most of its sales from ASEAN as compared to the other regions.
%
Source of Sales by Region
Source of Sales and Expenses, by Country
Motivation(s) for ASEAN Expansion
% o
f Sin
gapo
re C
ompa
nies
Sur
veye
dAv
erag
e Ra
nk
n=1,036 n=614
Select up to the top 5 factors and rank
them accordingly with ‘1’ being the most
important factor and ‘5’ being the least
important factor” .
Q: Which of the following ASEAN markets did your company generate most of its sales / incur most of its expenses from in the past 5 years?
n=1,036
1.3 1.9 2.4 2.2 2.5 2.5 3.0 2.8 3.5
83% 24% 18% 17% 15% 10% 9% 7% 2%
ASEA
N
Chin
a
Sout
h As
iaNo
rth A
sia
(exc
l. C
hina
)Eu
rope
Amer
icas
Oce
ania
Mid
dle
East
Afric
a
2.3 2.6 2.7 3.2 3.6 3.1 2.9 3.6 4.11.2
96% 45% 38% 31% 22% 18% 10% 5% 5% 1%
Sing
apor
e
Mala
ysia
Indo
nesia
Thail
and
Viet
nam
Philip
pine
s
Mya
nmar
Cam
bodi
a
Brun
ei
Lao
PDR
2.1 2.7 2.7 3.3 3.3 3.5 3.1 2.3
92% 83% 40% 40% 38% 33% 19% 18% 5%
1.7
Grow
th P
oten
tial
Acce
ss to
New
Mar
kets
Cust
omer
Pro
ximity
Cost
Effi
cienc
y & P
rodu
ctivi
ty
Bran
d De
velo
pmen
t
New
Supp
liers
and
/or R
esou
rces
Bene
fits f
rom
ASE
AN In
tegr
atio
n
Hedg
e Do
mes
tic B
usin
ess S
lowd
own
Oth
ers
Most Sales Generated
Tapping on market/ cultural similarities; Moving away from competitors; Market Diversification
Most Sales Generated
COMPANIES ARE KEEN TO EXPAND Into ASEAN But Face A Mix Of Challenges
Q: Which of the following markets is your company planning to expand into/further within the next 2 years?
Q: Which of the following markets is your company planning to expand into/further within the next 2 years?
Q: Which of the following markets is your company planning to expand into/further within the next 2 years?
Q: Which are your company’s top 5 major challenges when expanding specifically into the rest of the ASEAN region, excluding Singapore?
Expansion Plans over 2018 - 19
n=1,036
Plans To Expand
No Expansion Plan
23%
77%
Targeted Region(s) for Expansion Targeted Country(s) for Expansion
Major Challenges When Expanding Overseas in ASEAN
n=793 n=614
n=1,036
ASEAN
China
South Asia
North Asia (excl. China)
Europe
Oceania
Americas
Middle East
Africa
Indonesia
Malaysia
Vietnam
Thailand
Singapore
Myanmar
Philippines
Cambodia
Lao PDR
Brunei
Uncertain Economic & Political Conditions
Difficulty in Hiring Singaporeans for Overseas Job Scope
Lack of Market Knowledge
Difficulty in Sourcing Local Operational Support
Difficulty in Getting Permits and Licences
Lack of Information on Regulation & Tax Policies
Cultural & Language Differences
Unable to Find Suitable Partners/ Contacts
77%
22%
15%
11%
8%
7%
7%
6%
4%
37%
36%
30%
29%
27%
26%
21%
12%
5%
32%
25%
24%
23%
21%
19%
16%
16%
3%
06
77% of companies have plans to expand their businesses beyond Singapore in the next two years. Among these companies, 77% are keen to expand into ASEAN.
Q: Please rate each ASEAN country on the following attributes, with 10 being the most attractive and 1 being the least attractive.
Indonesia and Malaysia are identified as the top priority markets to enter, followed by Vietnam, Thailand and Myanmar.
Within these markets, potential customer demand, overall investment climate, ease of relationship-building and business costs are ranked among the top five attractive attributes.
Specifically for Indonesia, Vietnam, Thailand and Myanmar, favourable and transparent foreign investment regulations ranks amongst the top five attractive attributes. The availability of skilled labour is also the top attractive attribute in Malaysia. Singapore, Malaysia and Thailand score the highest in the level of digital infrastructure within ASEAN.
In venturing into ASEAN, uncertain economic and political conditions in ASEAN appear to be the biggest challenges for companies.
They are also concerned with key issues such as difficulty in hiring Singaporeans for overseas job scope, lack of market knowledge, and difficulty in sourcing local operational support.
n=1,036
INDONESIAMALAYSIA VIETNAMTHAILANDSINGAPORE MYANMARPHILIPPINES CAMBODIA LAO PDRBRUNEI
Presence of Singapore Com-panies (By Ranking)
Targeted Countries for Expansion (By Ranking)
Potential Customer Demand
Overall Investment Climate
Favourable & Trans-parent Foreign Invest-ment Regulations
Ease of Relation-ship - Building With Customers, Suppliers & Partners
Availability of Skilled Labour
Business Costs
Level of Safety & Stability
Level of Physical Infrastructure
Level of Digital Infrastructure
Ease of Dealing with Bureaucracy
-
5
1
2
55%
30%
14%
21%
9%
13%
22%
8%
10%
7%
2
1
3
4
52%
40%
22%
32%
13%
18%
28%
18%
18%
21%
4
3
52%
31%
16%
20%
11%
12%
21%
11%
9%
11%
5
7
42%
26%
15%
22%
11%
24%
19%
6%
8%
11%
6
6
34%
20%
9%
13%
6%
9%
17%
9%
5%
5%
7
8
22%
17%
11%
13%
7%
5%
22%
8%
5%
4%
8
10
21%
19%
14%
14%
11%
7%
13%
21%
11%
8%
9
9
18%
16%
14%
11%
6%
5%
16%
7%
5%
3%
49%
36%
22%
35%
15%
25%
25%
13%
22%
22%
37%
45%
58%
56%
53%
36%
20%
66%
65%
59%
T3B: Ratings 8 - 10 (out of 10) Top 5 Attractive Factors
07
08
LOW AWARENESS AND USAGE Of ASEAN Economic Community (AEC) And ASEAN Free Trade Agreements (FTAs)
Q: Looking ahead, how do you think the ASEAN Economic Community or the ASEAN regional economic integration will impact your company?
Perceived Impact of AEC/Integration
n=1,036
Q: Is your company a small-or-medium enterprise (SME) or a large company/ enterprise?
Awareness of AEC/Integration amongst Small and Medium-Sized Enterprises (SMEs)
Awareness of AEC/Integration amongst Large Enterprises
Q: How well-informed is your company about the ASEAN Economic Community or the ASEAN regional economic integration?
Perceived Outcome from ASEAN FTAs
Q: Has your company used or benefitted from any of the following free trade agreements (FTAs) under the ASEAN Economic Community (AEC)? If so, which of the following benefit(s) has your company gained using the aforementioned ASEAN FTAs?
n=1,036 n=232
56%
14%
4%
14%
12%
Some Opportunities
Significant Opportunities
Some Challenges
Significant Challenges
No Impact At All
Adequately Informed
Not Adequately Informed
Quite Well Informed
Not Informed At All Very Well Informed
23%
20%
36%
44%
21%
11%9%
15%
SMEs Large Enterprises
Have Not Used FTA/ Unclear about FTA Benefits
Benefitted from FTA
23%
77%
More Business Opportunities
Tariff Savings
Efficient & Cost Effective Procedures & Controls on Goods MovementOther Benefits
Copyright & Intellectual Property Protection
Labour Mobility
Ease of Technology Transfer
Access to Government Tenders
Mutual Recognition of Standards
68%
51%
38%
29%
24%
23%
21%
15%
13%
More competitive prices for customers; Higher income; Greater Investments
n= 887 n= 149
56%
14%
14%
4%
12%
5%16%
Q: Is your company planning to take advantage of the aforementioned ASEAN FTAs for future business operations in the region over the next 2 years?
Q: What are the challenges hindering your company from taking advantage of the various ASEAN FTAs?
70% of companies perceive that the ASEAN regional economic integration will bring at least some opportunities. 18% view that it poses some or significant challenges while 12% perceive that it has no impact at all.
Despite the overall positive sentiments towards AEC, only 57% of SMEs claim to be at least adequately informed about it. 43% are either not adequately informed or not informed at all.
Only a small proportion of companies (23%)
claimed to have benefitted from
ASEAN FTAs.
A lack of awareness and understanding of the ASEAN FTAs remains as the biggest challenge that hampers the majority of companies (67%) from using them.
In the next two years, half of the companies are unsure if they would use ASEAN FTAs and nearly 30% do not have plans to use the FTAs.
Among companies who have benefitted from ASEAN FTAs, the growth in business opportunities (68%), tariff savings (51%) as well as the efficient and cost-effective procedures and controls on goods movement (38%) are the top 3 most commonly cited benefits.
Plans to Use ASEAN FTAs in 2018 -19
Challenges Hindering Usage of ASEAN FTAs
n=1,036 n=1,036
Yes Not Sure
No
50%
29%
21%
23%09
Lack of Awareness & Understanding of ASEAN FTAs
Unclear FTA Rules & Procedures
Inaccessibility of ASEAN FTAs Information
No/ Little Benefits
Tedious/ Complex FTA Compliance
67%
% of Singapore Companies Surveyed
Other Challenges
36%
26%
22%
17%
7%
Q: When expanding into new ASEAN markets, which of the following areas do you think your company will require support in?
Q: How do you think SBF can support your company’s expansion into ASEAN?
Compliance with local regulations stood out as the top area in need of support during ASEAN business expansion.
Manpower also surfaced as a key area in need of support. 1 in 5 companies is looking for support in manpower issues, staff recruitment, and availability of skilled workforce for their ventures into ASEAN.
As one of the challenges in ASEAN integration involves raising awareness among companies, more can be done to provide information on ASEAN integration, regulations, FTAs and market knowledge to plug the gaps in awareness.
Business contacts and business-to-government relations are viewed as the next areas of priority where SBF can render support to companies.
n=1,036
Regulation Advisory
Financing
Business Partnership
Manpower Issues
Taxation
FTA Knowledge
Marketing
Compliance
Evaluating Alternatives
Choosing Destination
33%
26%
23%
21%
19%
18%
17%
16%
12%
9%
Planning & Conceptualisation
Business Registration
Staff Recruitment
Bank Account Opening & Other Admin Tasks
Securing Office Space
31%
20%
13%
9%
Setup & Operational Process
Compliance with Local RegulationsAccess to Customers
Availability of Skilled WorkforceSupply Chain & Logistics
Data & IP Protection
Access to Suppliers
35%
27%
22%
15%
13%
12%
Day-to-Day Operations
More/ Better Information on Impact of ASEAN Integration
Access to Information on ASEAN Regulations
More Information on ASEAN FTAs
Access to Business Partners
Facilitation of Better Busi-ness-to-Government Relations
Contact with Singapore Companies in ASEAN
Exposure to Markets by Organising Relevant Missions
Development of Skilled Employees
Championing Company’s Business Cause
Areas Where SBF Can Support Companies’ Expansion into ASEAN
More/ Better Information on Individual ASEAN Markets
n=1,036
58%
57%
55%
54%
43%
36%
28%
26%
19%
17%
8%Other Support
10
AREAS OF SUPPORT NEEDED IN Expanding Into ASEAN
Key Survey FINDINGS TAKEAWAY
- 9 in 10 companies perceive the importance of ASEAN for their overall global strategy, particularly when looking at 2018 and 2019.
- Looking ahead, companies are generally more optimistic about the ASEAN business outlook.
Positive Expectations for ASEAN Business Opportunities
- Top 5 ASEAN markets for overseas expansion are Indonesia, Malaysia, Vietnam, Thailand and Myanmar.
- The top 5 markets are perceived to be attractive due to their potential customer demand, favourable investment climate, ease of relationship-building and lower business costs, amongst other factors.
- The growth potential and opportunities for new market access are the biggest motivating factors for expanding into ASEAN.
Companies are Keen to Pursue ASEAN Expansion for New Growth Opportunities
Companies Face Critical Barriers to Entry
- Companies face a myriad of manpower, regulatory and business / industry-related challenges when expanding overseas into ASEAN. - The uncertain economic and political conditions in ASEAN stand out among the most commonly cited top 5 major challenges for expanding into the region.
- Despite the general positive sentiment towards the AEC / ASEAN regional economic integration and the perceived benefits of the ASEAN Free Trade Agreements (FTAs), the lack of accessible, clear information about these initiatives is a major obstacle to the companies’ usage.
More Can Be Done to Help Companies Take Advantage of Business Opportunities in ASEAN
- Local regulations and manpower stand out as the top areas in need of support.
- Key areas where SBF can support the expansion of companies into new ASEAN markets include the provision of information on the impact of ASEAN Economic Integration, ASEAN regulations, ASEAN FTAs and individual ASEAN markets.
- SBF can also render aid in the form of business partner matching and facilitation of B2G relations.
11
INFORMATION ABOUT THE SURVEY SAMPLECompany Characteristics
17%
Breakdown by Company Size
Breakdown by Local Shareholding
Breakdown by Annual Sales Turnover in SGD
86%
14%
36%
64%
32%
37%
14%
SMELarge
EnterpriseLess than 30%
Local Shareholding
At Least 30% Local Shareholding
<5 Mil.>100 Mil.
5 - 10 Mil.
10 - 100 Mil.
Breakdown By Global HQ Location
Singapore 67%
ASEAN (excl. Singapore) 3%
North Asia (excl. China) 11%
China 3%
Europe 9%
Americas 4%
Oceania 1%
South Asia 1%
Middle East 1%
Africa 0%
Breakdown by Singapore Standard Industrial Classification (SSIC) Code
Wholesale & Retail Trade
Financial & Insurance Activities
Manufacturing
Professional, Scientific & Technical Activities
Transportation & Storage
Information & Communications
Administrative & Support Service Activities
Other Service Activities
Others
Construction
21%
13%
12%
8%
7%
4%
4%
4%
1.3%
1.3%
1.4%
n=1,036
Real Estate Activities
23% of companies did not indicate their SSIC code.
12
n=1,036
n=1,036
SBF is the apex business chamber championing the interests of the Singapore business community in the areas of trade, investment and industrial relations. It represents 25,800 companies, as well as key local and foreign business chambers.
In July 2001, the Minister for Trade and Industry introduced a Bill in Parliament to establish the SBF Act, which was passed by Parliament and became law on 5 Oct 2001. The Federation was established on 1 April 2002, with the aim of representing the business community’s interests both locally and overseas. Under the SBF Act, all Singapore-registered companies with share capital of S$0.5 million and above are members of SBF.
About SBF
http://www.sbf.org.sg/ If you need any clarifications, kindly contact [email protected]. All Rights Reserved.
Survey conducted by
Commissioned by: Conducted by: