Singapore amongst top choices for ASEAN business expansion

Over 80% of companies aim to expand overseas, with Indonesian and Vietnamese companies leading in interest.

Singapore emerged as a key player in the ASEAN market for small and medium-sized enterprises (SMEs) and large enterprises in Southeast Asia and Greater China looking to expand overseas, according to the UOB Business Outlook Study 2024.

The report said that over 80% of surveyed businesses from seven key markets across ASEAN and Greater China expressed a desire to expand overseas, with Indonesian and Vietnamese companies showing the highest interest.

Nearly 80% of businesses are also optimistic about the current business environment, with one in four expecting significant improvements in business performance this year.  However, concerns about inflation, higher operating costs, and economic slowdown recovery persist. 

ASEAN emerged as the top market for expansion, with Malaysia being the most sought-after country, followed by Singapore, Thailand, and Indonesia. 

In contrast, only one-third of companies expressed interest in entering Mainland China. 

Businesses encounter challenges in overseas expansion, including difficulties in finding suitable partners (39%), a lack of in-house expertise for international growth (36%), and insufficient financial support (35%). Many seek additional funding, connections with large corporations, and tax incentives to facilitate market entry. Additionally, around 80% are interested in utilising cross-border digital trade platforms for their expansion efforts.

Whilst 90% of businesses acknowledge the importance of sustainability, only 44% have implemented sustainable practices. 

Barriers to sustainability adoption include increased costs to customers, profitability concerns, and inadequate renewable energy infrastructure. 

Businesses are also calling for support in the form of tax incentives, sustainable financing, and easier access to funding/grants to promote sustainability.

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Moreover, almost 90% of businesses recognise the importance of supply chain management, with around 30% diversifying their supply chains, improving inventory management, and utilising data analytics.

Additionally, around four in five businesses have digitalised operations in at least one department, with plans for increased digitalisation spending. 

However, challenges such as cybersecurity concerns and lack of digital skills amongst employees remain.