Business leaders remain upbeat about ASEAN's growth potential and are keen to work with governments, particularly in the areas of value chain, talent and infrastructure, as they seek to navigate imminent challenges, disruptions and inherent market complexities.
Indeed, despite dampened investment sentiment due to Covid-19 in 2020, a whopping 9 in 10 business leaders (93 per cent) expect positive revenue growth from their ASEAN businesses according to a survey commissioned by Standard Chartered in July.
Additionally, business leaders, buoyed by the opportunities provided by trade agreements such as the Regional Comprehensive Economic Partnership (RCEP), are looking to increase their investments into the region (81 per cent).
This growth will be bolstered in particular by four key growth sectors - construction and infrastructure; consumer products; pharmaceuticals and healthcare; as well as digital and e-commerce.
These four sectors, identified in a strategic point-of-view commissioned by Standard Chartered and prepared by PwC, showcase a high growth potential with compound annual growth rates projected to outpace the overall industry average over the next few years. As such, they present significant opportunities for both regional and foreign companies looking to expand in ASEAN stated the report.
“The four key sectors that this report highlights present significant opportunities for both regional and international companies in ASEAN. However, over the past few years, the region has experienced fundamental shifts and disruptions that are leading companies to revisit their growth and investment strategies,” said Heidi Toribio, regional co-head, client coverage, Asia corporate, commercial and institutional banking, at Standard Chartered.
It further identified six growth pillars that corporates are investing in. Termed the THRIVE framework, the six pillars - talent, hi-tech, regulatory, infrastructure, value chain, and environment - represent strategic areas that businesses are focused on.
Of these six pillars, business leaders identified value chains (65 per cent) as the top area where collaboration needs to be strengthened in the next two to three years to advance progress. This is followed by upskilling to future-proof the workforce (60 per cent) and developing of infrastructure solutions to overcome systematic barriers (55 per cent).
Business leaders in construction and infrastructure specifically identified value chain (83 per cent) and talent (78 per cent) as their top two pillars. This sector had an estimated gross output of US$881.2 billion in 2021 and is forecasted to grow at a compound annual growth rate (CAGR) of 12.2 per cent from 2021 to 2025.
Those in the consumer products sector meanwhile identified value chain (70 per cent) and infrastructure (66 per cent) as key pillars. From an estimated gross output of US$671 billion in 2021, this sector is projected to experience double-digit growth at an average of 10.8 per cent year-on-year from 2021 to 2025.
Separately, the majority of healthcare and pharma players are focusing on collaboration to unlock potential across the value chain (72 per cent), as well as investments to navigate regulatory shifts and governance issues (70 per cent). The sector had an estimated gross output of US$362.6 billion in 2021 and is forecasted to grow at a CAGR of 10.2 per cent.
Digital and e-commerce businesses see nurturing the talent of the future (87 per cent) and accelerating digital transformation (81 per cent) as the two key pillars. The sector had an estimated gross output of US$197.6 billion in 2021, a figure that is forecasted to grow at a compound annual growth rate of 10.6 per cent.
The report also raised the importance of having banking partners with strong regional presence to help companies navigate the complexities of local business and regulatory environment. Business leaders in particular found it important that banking partners have: digitalised platforms for real-time access; comprehensive multi-currency statement services for their foreign exchange hedging needs; strong cash management capabilities; and widespread cross-border network with deep understanding of local markets.
Patricia Mongkhonvanit, director-general, Thailand’s public debt management office, said working with a bank with international expertise was helpful when the government of Thailand pushed ahead with the country’s first sovereign sustainability bond to fund the MRT Orange Line project in Bangkok.
Standard Chartered Thailand acted as a joint structuring advisor and joint lead manager for the dual tranche issuance.
“Increasingly, the nation’s bond market is playing an important role within the Thai economy. Issuances need to be well-structured, meet global standards, and help develop Thailand’s bond market further,” said Mongkhonvanit. “Standard Chartered’s international expertise proved to be a core strength during the issuance process.”
The bond was ultimately listed on the Luxembourg Green Exchange and bidding for the THB20 billion tranche was more than three times over the issuing amount.
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