ASEAN’s resiliency and robust growth make it fertile ground for international expansion

The grouping of 10 Southeast Asian countries, known as ASEAN (Association of Southeast Asian Nations), has grown in importance in recent years. Blessed with natural resources, relatively skilled laborers, and a young populace driving digital transformations, ASEAN has become a rare beacon of hope at times of global slowdown and geopolitical uncertainties.

Between 2010 and 2022, ASEAN economies expanded by an average of 4.4%, pushing their aggregate gross domestic product (GDP) to USD 3.6 trillion¹ , exceeding India’s GDP of USD 3.5 trillion. When treated as a single unity, ASEAN’s GDP is ranked fifth globally² , trailing the U.S., China, Japan, and Germany.

In 2023, the region once again proved its resiliency, with strong domestic demand, easing prices, and improving export demand.

In the final quarter of 2023, major ASEAN central banks kept their policy rates unchanged, making the case for possible monetary easing this year amid consumer inflation moderation and ongoing growth momentum, according to McKinsey³ .

Lower policy rates would stoke an even greater growth momentum across the region with a combined population⁴ of more than 660 million. That puts ASEAN, in terms of the populace, just behind India and China.

Moreover, over half of ASEAN’s populace is aged below 30 years, making it a highly appealing destination for international expansion from the relatively aging populace of the industrialized nations.

A recent survey by HSBC⁵ of over 3,500 international companies with a commercial interest in ASEAN found that a staggering 91% of them were planning for further expansion in the region.

Around 40% of ASEAN’s population, or around 270 million, is concentrated in Indonesia, a sprawling archipelago of more than ten thousand islands spanning three time zones.

Indonesia acts as a gateway to ASEAN’s 680 million people, as well as a hub for regional and international markets with 35 trade agreements, including the Regional Comprehensive Economic Partnership (RCEP), the largest trade pact which includes the likes of China, Japan, South Korea, and Australia.

In terms of GDP, Indonesia accounted for more than one-third of ASEAN’s combined GDP, making it the largest economy in the region and the only ASEAN country that is a member of the G20.

Over the past decade, Indonesia has been pushing to extract more value from its resources, ranging from local processing of mineral ores to export ban on select concentrates, to major infrastructure developments outside the main island of Java, to greater incentives for research and development (R&D) to allow for knowledge transfer to its young populace.

A case in point is the country’s nickel sector, which mines are located in the historically underdeveloped eastern region. A combination of export restriction policy and public investment in infrastructure resulted in billions of dollars of foreign direct investment (FDI) for domestic processing, spurring Indonesia to become the largest producer of nickel and a major supplier of other minerals needed in the global push toward a low-carbon economy.

“Indonesia can potentially emerge as a key player in the global EV supply chain and drive its overall economic growth. If Indonesia plays its cards well, the rise in the EV ecosystem could add to Indonesia's potential growth, pushing it up from 5.3% now to 5.8% by 2028,” said Riko Tasmaya, Managing Director and Head of Wholesale Banking HSBC Indonesia.

“Indonesia is one of the countries where GDP growth in the coming decade will likely be higher than the expansion in the previous decade as the economy climbs up the manufacturing value chain,” he added.

In addition, around 25% of Indonesians⁶ are below 15 years of age, making it one of the fastest adopters of digital transformation globally.

Its inherently young populace and improving internet connectivity also make Indonesia a good destination for investment in the digital economy. In just three years, the country’s gross merchandise value⁷ (GMV) surged nearly 90% to USD 77 billion in 2022 and is estimated to reach USD 130 billion in 2025.

As a global bank operating in Indonesia for 140 years, HSBC not only has the presence and operational expertise but also the tacit knowledge and thorough understanding of how to tap into Indonesia’s prospective sectors.

Beyond Indonesia, HSBC has a similar presence across the ASEAN region. With over 135 years of experience in Southeast Asia, HSBC fully understands that the region is no monolith and is not a place for a one-size-fits-all approach.

The varying degrees of development across six major ASEAN countries (Indonesia, Singapore, Thailand, Vietnam, Malaysia, and the Philippines), and the frontier markets of Brunei, Cambodia, Lao, and Myanmar, require adept know-how in different customs, regulatory frameworks, and strong cross-border understandings.

HSBC’s strong network of over 15,000 staff across 200 locations helps cover 93% of ASEAN GDP, providing a strong platform for secure and efficient international transactions. HSBC has also established dedicated ASEAN desks in China, Germany, France, and the U.K. to help international investors make their forays into the region.

Beyond those, HSBC is also committed to supporting our clients on their ESG journeys and becoming ASEAN's leading sustainability transition partner. Over the next decade, Southeast Asia will continue to be one of the fastest-growing regions and an increasingly important growth engine in the Asia-Pacific. HSBC is well-placed to be your banking partner in ASEAN.

“HSBC is committed to supporting our clients to realize this growth potential through our world-class capabilities,” Tasmaya said. (ism)