There are a lot of countries in Asia – but most businesses tend to think only of a few when considering international expansion or investment. Interest in China has faded as more realise how difficult it is to deal with, and outsourcing to India is drying up as wage inflation eliminates its competitiveness. The tiger economies of Japan, Singapore, Taiwan and Hong Kong continue unabated. However, those looking for new opportunities, whether it’s a matter of tapping export markets or seeking better value and quality manufacturing or outsourcing, should look elsewhere.
The biggest “rising star” country in the last few years has been Malaysia. The reduction in red tape has been notable, and strong action has been taken against corruption. The government is pushing Kuala Lumpur as a regional and international financial centre (particularly for Islamic finance). However, it’s a great country for trade from many other perspectives – good value, good infrastructure and communications, growing market and a well-educated workforce. Like most of the countries I’m including here, it’s in the ASEAN Free Trade Area, so establishment in any one of them can open up significantly wider markets.
Philippines fell out of consideration in the 90’s for various reasons, but foreign business interest has been increasing in the last few years. It is arguably the best country in the region for Shared Service Centres and Outsourcing, and has been taking business away from India, with its flexible workforce and excellent English language skills. Other types of business face difficulties that can’t be overcome – it may be one country, but made up of over 7,000 islands, and plagued by typhoons on an annual basis, so economic activity is centred in just two or three locations.
Recently, the most heavily promoted country for trade has been Indonesia. There are many government incentives and the statistics are all encouraging, but many shy away because of security concerns.
Vietnam’s economy continues to expand rapidly, and it’s a country worth considering as a more manageable alternative to China – although there’s still plenty of red tape. For a number of years the pace of inward investment exceeded the availability of skilled personnel, but that issue is quickly being overcome. Trade treaties with China and Japan, as well as other ASEAN countries, make Vietnam an attractive base.
Slightly more intrepid businesses that want to stay ahead of the curve should now be looking to neighbouring countries which are now opening up. In my opinion, Cambodia will rival Vietnam and Malaysia within another five years, and although smaller, Laos won’t be far behind.
The country that over the last few years has emerged from nowhere – in business terms – is Myanmar (Burma). There have been rapid changes since 2010, five years before the new democratic government led by Aung San Suu Kyi came to power – and there were a lot of regional business leaders already negotiating deals there when I first visited in 2013. It is a big country, most of the labour force work in agriculture, the infrastructure is terrible and the education level is poor, but the opportunities feel terrific.
Other major countries in Asia have been declining as attractive business destinations. Thailand has labour availability issues as well as a system that discourages foreign business ownership. South Korea is a vibrant economy boasting some of the world’s leading brands, but is difficult for foreigners to penetrate, with almost all economic activity in the hands of a small number of powerful “chaebol”, and the country feels to be in gentle decline. Sri Lanka and Bangladesh continue as important textile manufacturing centres, but rarely figure in any other international business considerations.
Asia as a whole remains as attractive and important as ever – but it’s the emerging countries that are the most exciting.
by Oliver Dowson, CEO at ICC – International Corporate Creations