These top 5 ASEAN economies could be losing USD15b in profit

Are they missing out on the real profit driver?

The top five ASEAN economies are losing USD 15 billion in profit, according to the Simon-Kucher ASEAN Pricing Stress Test 2013 which analyses firms in Singapore, Malaysia, Indonesia, Thailand and the Philippines. But companies can stop losing money – if they would just allow for small price increases.

The economies in ASEAN are growing steadily. Nevertheless, increasing price pressure from competitors, rising raw material costs and inflation rates worry company managers.

As the ASEAN Pricing Stress Test 2013 of the international strategy and marketing consultancy Simon-Kucher & Partners reveals, the top five economies in the region could earn added profits of approximately USD 15 billion if companies would just implement a marginal price increase of two per cent.

For the study the consultancy analysed approximately 1,400 companies listed on the stock exchanges of Singapore, Malaysia, Indonesia, Thailand and the Philippines and calculated the impact of small price increases on a company’s profit.

"Companies in ASEAN are losing out by focusing solely on cost-cutting," explains Dr. Jochen Krauss, Managing Director of Simon-Kucher’s office in Singapore. "They have to look at the real profit driver – their prices." Krauss recommends professional price management to companies. Consumer/retail sector shows highest profit potential

A closer look at the study findings reveals that the highest average profit growth potential lies in companies in the consumer/retail sector (+48 per cent), followed by manufacturing companies (+41 per cent), the construction industry (+32 per cent) and the telecommunications sector (+27 per cent). "Companies with low returns have the biggest potential," reports Jan Weiser, Director at Simon-Kucher.

"That’s why just small price increases can have the largest profit impact here." This statement also reflects the ranking of the top 10 ASEAN companies with the greatest potential to increase profits by raising their prices by two per cent.