Vietnam was listed in the top three most popular expansion destinations in South Asia, following Singapore and Japan, in United Overseas Bank’s Asian Enterprises Report 2016.
“Vietnam’s stable political environment, favorable economic conditions with low inflation and accommodative monetary policy, as well as its young and active workforce have added to the its attractiveness as an expansion destination,” the report stated.
Malaysian, Thai and Singaporean enterprises are the keenest on Vietnam, with 38 per cent, 35 per cent and 29 per cent, respectively, planning to expand in the country over the next three to five years.
Asia’s rising importance in the global economy continues unabated, UOB noted. The region’s share of the global economy jumped from 18 per cent in 1980 to 31 per cent in 2015 and is expected to increase to 45 per cent by 2030. Helping drive these changes are Asian enterprises, which account for more than 97 per cent of all enterprises and employ over half of the workforce across the 21 Asia Pacific Economic Cooperation (APEC) countries.
Against a backdrop of anemic global growth, Asian enterprises prefer to expand into tried and tested markets in the region. Reflecting this trend, the 2016 survey revealed that more firms are now operating in Singapore and Malaysia than originally anticipated in 2014. Within the region, the 2016 survey found that in the next three to five years, Asian firms favor expansion into more mature markets such as Singapore (32 per cent) and Japan (29 per cent) over emerging ones such as China (22 per cent) and Indonesia (21 per cent).
Despite a challenging economic outlook, Asian enterprises remain resilient by pursuing innovation and overseas expansion to drive growth.
UOB is now supporting the growth ambitions of Asian enterprises by establishing memoranda of understanding with various government agencies, including Vietnam’s Foreign Investment Agency (FIA), the China Council for the Promotion of International Trade (CCPIT), and Indonesia’s Investment Coordinating Board (BKPM).
However, even as Asian enterprises benefit from regional economic cooperation initiatives that liberalize trade tariffs and grant access to global value chains, navigating the ebbs and flows of international trade will remain a challenge in a low-growth environment.
The further opening of borders is a double-edged sword, UOB believes, which could lead to increased competition from rival companies in neighboring countries. This adds to the challenges already posed to Asian enterprises from declining consumer demand, rising business costs, and difficulties in accessing finance and attracting talent.
To stay competitive, Asian enterprises will not only need to be mindful of the economic and geopolitical realities of this diverse region and the domestic constraints they face but also be innovate and improve their productivity.
The UOB Asian Enterprises Report 2016 was produced by UOB Group Strategic Communications and Customer Advocacy in close partnership with UOB Group Wholesale Banking and UOB Global Economics and Markets Research.VN Economic Times