STRONG global undercurrents are posing a formidable challenge to ASEAN's growth prospects and regional economic integration agenda. We are now seeing a rise in protectionist policies by the major powers that could disrupt trade, and restrict cross-border flow of goods, services, capital and people.
The risks of a trade war materialising between the world's two largest economies will affect export-dependent economies such as ASEAN, which are major exporters of 'intermediate goods'.
Despite the looming threat of trade protectionism, ASEAN economies are projected to remain resilient, with a GDP growth forecast of 5.4 per cent in 2018, compared to world GDP growth of 3.1 per cent. ASEAN is poised to maintain its growth momentum, averaging 5.2 per cent per year from 2018 to 2022.
In fact, Singapore businesses are looking positively into ASEAN expansion. The SBF ASEAN Outlook Survey 2017/18, released recently, indicated that 77 per cent of companies who responded are planning for overseas expansion, of which, 77 per cent are looking into ASEAN as the region for expansion in 2018-19.
The ASEAN Economic Community (AEC) plays an important role to this positivity in ASEAN, where 70 per cent of the companies surveyed felt that the integration will bring opportunities for them.
Each ASEAN economy offers unique opportunities and challenges. To succeed in overseas endeavours, it is imperative that businesses hone up on manpower, regulatory and business/industry-related information and accessibility issues before taking the plunge.
They should also hunt in packs and look towards trade associations and chambers for link-ups with overseas partners and government agencies.
Multilateral/bilateral platforms, namely the ASEAN Business Advisory Council, the Indonesia-Singapore Business Council, the Malaysia-Singapore Business Council, and the Philippines-Singapore Business Council, managed by the Singapore Business Federation (SBF) are one avenue for Singapore businesses to establish networks for the purpose of exploring opportunities and raising business issues in the market(s).
International agreements such as free trade agreements, is another important aspect for businesses to consider and be aware of when expanding into ASEAN. These international agreements help to lower market entry barriers and provide a layer of policy certainty for Singapore businesses' operations in ASEAN.
In addition to the signing of the ASEAN Free Trade Area in 1992, Singapore has concluded another 23 free trade agreements to support Singapore businesses' overseas expansion.
SBF is already stepping up on clinics and seminars for free trade agreements to spread awareness of Singapore's network of free trade agreements and how businesses can benefit from them.
As a businessman myself, I would urge businesses to be nimble and adaptable in their market entry approach. Building trust with in-market partners and constantly seeking their advice, expertise and experience in the market are important ways to build a strong foundation for market entry.
- The writer is chairman of the Singapore Business Federation (SBF)