13 September 2023

Australian companies expect significant growth in ASEAN

HSBC’s Global Connections research released today reveals that Australian businesses are confident of continued growth in the ASEAN region with companies, on average, expecting to see a 22.8% increase in their ASEAN organic growth over the next 12 months with over half (55%) expecting to significantly increase their inorganic growth in the ASEAN region by latest 2024.

The survey found that Australia’s participation in free trade agreements is also a significant factor in expected growth in ASEAN markets. 72% are looking to take advantage of the Regional Comprehensive Economic Partnership (RCEP), while 68% are looking to use the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to increase trade with ASEAN.

However, the majority of respondents said they are looking for more information about the treaties, with 70% interested in finding out more about (CPTPP) and 64% about (RCEP).

“The survey highlights growing confidence in ASEAN on the part of Australian companies. This confidence coupled with the Federal government’s focus on the region via its South-East Asian Economic Strategy means we can expect to see more Australian companies scale up in the region,” said Steve Hughes, Country Head of Commercial Banking HSBC Australia.

While many Australian businesses have established connections in ASEAN across multiple markets, the survey also found that Australian companies are the most likely to be targeting the Philippines for new opportunities with 29% reporting plans to expand into the Philippines over the next two years, with an interest in the growing middle class identified as one of the reasons (34%).

ASEAN attractions

The survey suggests that the affordability and quality of ASEAN’s workforce together with consumer opportunities rank as important draws for Australian firms operating within the region. Almost three in 10 (29%) say competitive wages and skilled workforce (28%) make ASEAN attractive for business expansion, pointing to the region’s importance in Australian supply chains. However, the survey found consumer opportunities are also important: over a quarter (27%) are also attracted by the size of the ASEAN market, its growing digital economy (26%) and young population and demographics (26%).

When asked which technologies ASEAN is leading the way in, Australian companies were most likely to identify e-commerce (32%), with three in ten identifying digital payments and mobile wallets.

“Southeast Asia is playing an increasingly important role for Australian companies looking to diversify their supply chains but a growing, young and digitally connected population will provide even greater opportunities for Australian companies in a number of different sectors,” said Mr Hughes.

Challenges faced in ASEAN operations

The survey also looked at the challenges Australian companies expect to face as they grow in the region. Australian firms were most likely to cite 'financial stability’ (35%) and the lag in ESG credentials (35%) in ASEAN markets compared to other markets as key challenges for them.

Workforce was also identified as a challenge with 33% of respondents saying they had faced challenges with cultural differences in ASEAN markets, including different languages and ways of doing business.

The full report can be found here: Opening up a world of opportunity | HSBC Australia

HSBC commissioned an online survey of 3,509 businesses based in nine markets: mainland China, India, UK, France, Germany, US, Australia, Hong Kong, and GCC countries (United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Oman and Kuwait). Survey respondents were key decision-makers from companies with annual turnover of at least USD5 million who are already doing business in Southeast Asia or considering doing so. The survey ran from July 25 to August 2, 2023.

Note to editors:
HSBC Australia
In Australia, the HSBC Group offers an extensive range of financial services through a network of 33 branches and offices. These services include retail and commercial banking, trade finance, treasury and financial markets, payments and cash management and securities custody. Principal HSBC Group members operating in Australia include HSBC Bank Australia Limited (ABN 48 006 434 162 AFSL/Australian Credit Licence 232595) and The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970 and AFSL 301737).

HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of US$3,041bn at 30 June 2023, HSBC is one of the world’s largest banking and financial services organisations.

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Belinda Skurnik
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Email: belinda.skurnik@hsbc.com.au