Middle East Companies With an ASEAN Focus Upbeat About Business Growth In Indonesia

INDUSTRY co.id - Jakarta, Middle East companies focusing on ASEAN are positive about business growth in the region. This is according to a survey commissioned by Standard Chartered for its “Borderless Business: Middle East-ASEAN Corridor”, a strategic report that explores high-potential opportunities for cross-border growth in this corridor.

All surveyed Middle East companies expect business growth over the next 12 months, with over 80 per cent of them projecting an annual increase in both revenue (82%) and production (81%) of over 10 per cent.

Of the ASEAN markets targeted for growth, 67 per cent of survey respondents said they are focusing on expanding in Indonesia to capture sales and production opportunities. This comes after the top choice of Malaysia (78%) and is followed by Singapore (69%).

Access to the large and growing ASEAN consumer market (60%), access to a global market enabled by a network of Free Trade Agreements (58%) and diversification of production footprint (51%) were regarded as the most important drivers for expansion into the region, according to senior executives of the surveyed Middle East companies.

The Regional Comprehensive Economic Partnership (RCEP) is also expected to attract more investments into the 10-nation bloc. All respondents agreed that the ratification of the RCEP agreement will lead to more investments from their company. Close to 70 per cent expect their company to increase investments by more than 50 per cent over the next 3-5 years.

The survey also showed Middle East companies recognising a wide range of risks within the region. The top three identified risks are the COVID-19 pandemic or other health crises (69%), understanding of regional regulations (49%) as well as geopolitical uncertainty and trade conflicts (47%).

Furthermore, the respondents agreed that adapting their business model to industry practices and conditions within ASEAN (64%), sourcing funds and managing liquidity (56%) and building relationships with suppliers and adapting supply chain logistics (51%) are the most significant challenges in the next 6 to12 months.

To drive resilient and rebalanced growth in ASEAN and mitigate these risks and challenges, the survey respondents considered executing digital transformation programmes (60%), driving sustainability and ESG (Environment, Social and Governance) initiatives (53%) and entering new partnerships / joint ventures to increase market presence (47%) as the most important areas for their companies to focus on.

To support their growth, these companies said they are seeking banking partners with foreign exchange hedging and comprehensive multi-currency settlement services (64%), extensive trade financing services (58%), and strong cash management capabilities (53%).

Rino Donosepoetro, Vice Chairman, ASEAN & President Commissioner Indonesia, Standard Chartered, said: “The Middle East and ASEAN enjoy increasingly close economic ties. In 2020 alone, Middle East companies invested USD700 million into ASEAN, a three-fold surge from 2017. We continue to see a growing number of opportunities for Middle East businesses in the region. Apart from being a destination for energy exports, ASEAN is emerging as a promising economic partner for Middle East companies’ expansion into growth sectors such as refining and petrochemicals, infrastructure and real-estate, renewable energy, retail and consumer goods, and digital infrastructure and services. As the only international bank with a presence in all 10 ASEAN markets, Standard Chartered is well-positioned to help our Middle East clients diversify into new non-oil sectors and leverage the tremendous opportunities the region has to offer.”

Standard Chartered has launched the seventh edition of Borderless Business series. To download the Standard Chartered “Borderless Business: Middle East-ASEAN Corridor” report, visit: www.sc.com/en/borderless.