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AEC 'to open doors' for Thai firms
Publication Date : 27-08-2014
Consumer-based markets such as Vietnam, the Philippines and Indonesia appear to be lands of opportunity for Thai companies, the head of Nielsen (Thailand) said after a consumer research on Asean economic integration.
"In Vietnam, the Philippines and Indonesia, there are millions of young people, while the birth rates in each country are still high. This could be a huge opportunity ready to explode in the next few years," Suresh Ramalingam, Nielsen managing director for the Thailand-Vietnam-Myanmar cluster, told The Nation.
Apart from that, the middle class in Asean countries would be another key economic driver. These people want to work hard and earn money to acquire things and for shopping, taking vacations and enjoying entertainment.
Ramalingam also suggested there was more room to grow for fast-moving consumer goods (FMCG) businesses, including beverages, in Vietnam and Indonesia. Meanwhile, the Philippines should be a fertile ground for Thai retailers in the next few years.
He added that reaching out to target consumers, particularly younger people, via digital media channels such as mobile applications and social networks was also important for Thai companies.
He revealed this market insight after his company conducted consumer research for its "Asean 2015 Report". This report also found that business operators that truly understand the Asean context and develop practices that allow a level of flexibility and agility would gain success once the Asean Economic Community (AEC) comes into effect next year.
The Organisation of Economic Cooperation and Development has forecast that gross domestic product in the combined Asean community would be about 6 per cent per year from 2011 to 2016.
Meanwhile, Nielsen estimates that as of 2012 there were more than 190 million people in Southeast Asia who could be defined as middle class, in that they had the financial means to make purchase decisions based on their level of disposable income.
Mostly because of the economic growth of the region, Nielsen projects the wealth distribution that is currently observed will continue, and by 2020 the middle-class population in Southeast Asia will more than double to 400 million.
Nielsen also found that the reality of an open Asean marketplace after 2015 was that there was an opportunity for Thai companies to enter a new market, with neither they nor local firms in the same segment having been aware of each other beforehand.
However, the competition in the region would be more intense because of new international players.
The expected influx of foreign and intra-Asean investment will not only bring an injection of capital but also foreign ideas and business practices like foreign direct investment, mergers and acquisitions.
The size of the integrated Asean marketplace and the rich tapestry of cultures and business dynamics will see business partnerships and alliances become even more critical than they were in the past, the firm said.
The AEC involves changes in rules, regulations and detailed processes between country members, particularly on customs policies and tax reporting. As a result, companies will need to develop a certain level of flexibility and agility to anticipate and respond to change.