Mideast firms with Asean focus upbeat on growth

For Middle East corporations focusing on Asean markets, Malaysia, Singapore, and Indonesia are the most attractive expansion destinations, according to a survey by Standard Chartered.

The survey, which explores high-potential opportunities for cross-border growth in the Middle East-Asean corridor, found that Middle East companies expect business growth over the next 12 months, with over 80 per cent of them projecting an annual increase in both revenue (82 per cent) and production (81 per cent) of over 10 per cent.

“Asean is a fast-growing trade bloc with increasing economic and financial influence. As Middle East countries look to diversify their economies away from oil, regional businesses are exploring new avenues of investments and Asean has emerged as the preferred option due to multiple regional and country-level alliances,” said Mohamed Salama, head, Corporate, Commercial & Institutional Banking (CCIB), Mena.

Asean provides unparalleled trade and investment prospects across various sectors such as refinery and petrochemicals, real estate and infrastructure, he said.

Salama said Asean’s focus on becoming future-ready in areas such as digital and renewable energy offers Middle East companies and investment firms’ ample opportunities to invest, develop and provide solutions to meet their sustainability goals. “Given our unique global footprint, Standard Chartered has the right mix of local knowledge and expertise across all Asean markets to better help our clients leverage these potential opportunities and strive for continued success.”

Of the Asean markets targeted for growth, 69 per cent of survey respondents said they are focusing on expanding in Singapore to capture sales and production opportunities. This comes after the top choice of Malaysia (78 per cent) and is followed by Indonesia (67 per cent). Among the Middle East companies keen to tap Singapore for expansion opportunities, 94 per cent consider the city-state a major regional R&D / Innovation centre while 87 per cent of the surveyed executives view Singapore as a desirable hub location for regional procurement. The same number of respondents (87 per cent) agreed that Singapore is an ideal place to set up their regional sales & marketing headquarters.

The Middle East and Asean enjoy increasingly close economic ties. In 2020 alone, Middle East companies invested $700 million into Asean, a three-fold surge from 2017. We continue to see a growing number of opportunities for Middle East businesses in the region. Apart from being a destination for energy exports, Asean is emerging as a promising economic partner for Middle East companies’ expansion into growth sectors such as refining and petrochemicals, infrastructure and real-estate, renewable energy, retail and consumer goods, and digital infrastructure and services. As the only international bank with a presence in all 10 Asean markets, Standard Chartered is well-positioned to help our Middle East clients diversify into new non-oil sectors and leverage the tremendous opportunities the region has to offer,” said Rino Donosepoetro, vice chairman, Asean & president Commissioner Indonesia, Standard Chartered.

The survey also showed Middle East companies recognising a wide range of risks within the region. The top three identified risks are the Covid-19 pandemic or other health crises (69 per cent), understanding of regional regulations (49 per cent) as well as geopolitical uncertainty and trade conflicts (47 per cent). The respondents agreed that adapting their business model to industry practices and conditions within Asean (64 per cent), sourcing funds and managing liquidity (56 per cent) and building relationships with suppliers and adapting supply chain logistics (51 per cent) are the most significant challenges[5] in the next six to12 months.

— issacjohn@khaleejtimes.com