https://innovateuk.blog.gov.uk/2016/04/13/7-tips-for-setting-up-a-business-in-south-east-asia-asean/

7 tips for setting up a business in South East Asia (ASEAN)

  1. South East Asia is made up of 10 different markets

Map of ASEAN economic community

Even though everyone is talking about “ASEAN” as one single market and the seventh largest economy globally, the reality is - it is not yet operating in this way.

When looking at South East Asia for new opportunities, you need to look at the region as ten very distinct markets, with:

  • 10 currencies,
  • 9 official languages,
  • 10 separate legal systems and
  • varying levels of infrastructure.

You only have to compare a journey from the airport in Singapore to that in Jakarta to get an idea of the vast differences between markets.

Each market is unique and presents varied opportunities for foreign companies looking to expand. This diversity can act as strong barriers to achieving scale.

Unlike some markets in Latin America and Western Europe where multi-nationals are able to cluster countries into broad markets - this is not as easily achieved in South East Asia given the differences in language, culture and spending habits.

In our experience companies are looking to adopt a highly localised, single country go-to-market strategy with management run out of a centralised regional or global headquarters, like Singapore.

  1. Visit the markets

To truly understand ASEAN you need to get on a plane and get out to the markets you are interested in, meet with potential suppliers, customers, partners and the various chambers of commerce.

Speak to people who have lived and worked there and can give you a range of perspectives on how to move forward. 

  1. Know what the opportunities are

Tips for doing business in South East Asia, Urban rural

We are seeing a lot of excitement around these areas:

  • A population of more than 620 million people
  • Rapidly growing middle class
  • Highly connected, largely mobile, population
  • Hundreds of millions of people who will experience the internet for the first time on a smart phone
  • Increased intra-ASEAN trade and reduction of tariffs and duties
  • High rates of urbanisation
  • Availability of low cost intra-ASEAN travel
  • Easy movement of labour
  1. Understand the challenges

Yes, the opportunities are exciting but they also need to be considered against the backdrop of potential challenges and frustrations. These include:

  • economic disparity
  • varying levels of sophistication of doing business across the markets

You may be dealing with established centres for international business such as Singapore and those markets that are only just opening up to foreign investment, such a Cambodia and Myanmar.

The following can be pain points for companies who are used to a straightforward business and legal environment:

  • Local and regional regulations (for example licence requirements, e-commerce and data protection rules)
  • immigration policies
  • brand protection
  • intellectual property registration .

Bribery and corruption are also a real risk for companies doing business in this part of the world.

  1. Can you do it on your own?

Most ASEAN markets have restrictions on foreign direct investment , often requiring foreign companies to have local partners, local shareholders, restricting the key foreign personnel or requiring companies to be screened and approved prior to commencing operations. It has been recognised that, apart from Singapore, ASEAN members are generally more restrictive than OECD countries. This will depend on the sector you are operating in, as some sectors are more regulated than others such as telecoms, fisheries transport or banking.

Always do your homework to understand how you can access a market. If a local partner is required, know who you are building your business with.

  1. Can you get the right people involved?

Finding the right team to help grow your business is challenging in any market. However, there may be additional challenges in South East Asia given the varied levels of education, relevant industry experience and language requirements.

Some countries and sectors also have strict restrictions on employing foreigners. If you are planning to relocate staff or hire foreign talent – check to see whether they will be able to work in-country.  Singapore’s Ministry of Manpower, for example, has a helpful pre-employment self-assessment tool which will give you an indication of whether someone may be eligible for an Employment Pass. 

  1. Be patient

If you have committed to a market – make sure the timelines you have proposed are realistic so that you can manage expectations. Some areas that may take more time than you think are:

  • immigration processes
  • import licences
  • business licences requiring additional documentation
  • areas that may be affected by legal or government department changes without any warning.

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