Malaysia a favoured expansion destination for Asean companies seeking growth
KUCHING: Malaysia remains one of the top choices offering the best expansion opportunities in the Asean region over the next 12 months, according to a survey commissioned by Standard Chartered for its Borderless Business: Intra-Asean Corridor.
The report that explores highpotential opportunities for crossborder growth within the region also cites automotive, healthcare and digital services as key growth sectors for Malaysia.
The country has started making headway in developing capabilities to spur growth both in the electric vehicles segment and data centre supply. Malaysia is also seen as a leading medical device manufacturing hub and a regional market leader in medical tourism.
Standard Chartered Malaysia managing director and chief executive officer Abrar A Anwar, said: “While Covid-19 has somewhat dampened foreign direct investment sentiment globally, Malaysia remains a wellplaced destination for companies looking for opportunities to diversify their supply chain and operations in Asean – with electrical and electronics, healthcare, automotive and ecommerce being key growth sectors on our watchlist for Malaysia.
“Building on our strong legacy of 146 years in the country, we have been supporting businesses with appetite for expansion with on-the-ground advisory and innovative financial solutions that meet local and cross-border needs.”
Overall, the majority of Asean companies focusing on intraregional opportunities expect robust business growth in the region over the next 12 months (99 per cent of respondents expect growth in production and 96 per cent anticipate growth in revenue).
Access to the large and growing Asean consumer market (69 per cent), access to a global market enabled by a network of Free Trade Agreements (59 per cent) and availability of abundant and skilled workforce (49 per cent) were among the most important drivers for expansion across the region according to the senior executives of the surveyed Asean companies.
In addition, with the Regional Comprehensive Economic Partnership (RCEP) expected to attract more investments into Asean, all respondents said that they are planning to increase their investments over the next 3-5 years. Within Asean, Malaysia is a major hub for investments, being the third largest source for intra-Asean FDI in 2019.
The survey also shows companies recognising a wide range of risks in the region. The top three identified risks are the Covid-19 pandemic or other health crises (75 per cent), geopolitical uncertainty and trade conflicts (60 per cent), and the slow revival of the economy and the drop in consumer spending (49 per cent).
Furthermore, respondents also agreed that adapting their business model to industry practices and conditions within Asean (67 per cent), building relationships with suppliers and adapting supply chain logistics (66 per cent), as well as understanding regional regulations, payment methods and infrastructure (53 per cent) are the most significant challenges they anticipate in the next six to 12 months.
To drive resilient and rebalanced growth in Asean and to mitigate these risks and challenges, the surveyed executives identified entering new partnerships/joint ventures to increase market presence (53 per cent), driving sustainability and nvironment, social and governance (ESG) initiatives (53 per cent) and executing digital transformation programmes (52 per cent) as the most important areas for their companies to focus on.
To support their growth, these companies say they are seeking banking partners with strong cash management capabilities (52 per cent), one-stop corporate financing and capital-raising services (52 per cent), and extensive trade financing services (47 per cent).