According to the UOB Business Outlook Study this year, small- and medium-sized enterprises (SMEs) and large enterprises in Southeast Asian and Greater China regions are turning their attention towards the Asean region in hopes of boosting profits and reputation facilitated by overseas ventures.
The study, now in its fifth year, surveyed more than 4,000 businesses in seven key markets across the Asean and Greater China regions. According to its findings, more than 80% of businesses have goals for overseas expansion, with Indonesian and Vietnamese companies feeling the strongest about it.
Manufacturing and engineering, as well as tech, media and telecom, form the top two sectors looking to expand overseas.
Additionally, the study found that eight in 10 businesses carry optimistic outlooks towards the current business environment, with one in four anticipating significant improvements in business performance this year.
However, in the face of inflation, higher operating costs and recovery from the overall economic slowdown, businesses continue to be cautious as they focus on reducing costs and adopting digital solutions to boost productivity.
For many of the surveyed businesses, overseas expansion plans form a key component of growth plans.
See also: Asean conglomerates may need Geneen’s spirit
According to the study, around three in five businesses identified Asean as their top pick for market expansion within the next three years. Within Asean, Malaysia, followed by Singapore, Thailand and Indonesia, were identified as the “most important” countries that businesses want to venture into.
However, several challenges arise from overseas ventures, with 36% and 35% of businesses indicating a lack of in-house expertise to drive overseas expansion and inadequate financial support or funds, respectively.
Additionally, the study found that sustainability has become a priority for most businesses, with 90% indicating that it is important to them. Despite this, more help is required for successful implementation, as the study found that only 44% have introduced sustainability practices.
See also: Foreigners dump Thai bonds as BOT signals no further rate cuts
Less than 50% of SMEs in Singapore have sustainability practices in place, while around half of the businesses in Thailand and mainland China have done so.
Barriers to implementing sustainable practices include increase in costs to customers, potential impact on profits and lack of proper infrastructure for renewable energy, as cited by surveyed businesses.
The study found that businesses require greater support such as tax incentives, sustainable financing options and easier access to funding in order to successfully adopt sustainable practices.
“For SMEs with cross-border ambitions, our network connects them to the right partners for strategic insights and solutions, and also expertise to spot emerging trends which may lead to new business opportunities across Asean and Greater China — the top two regions that businesses aspire to expand to,” says Eric Lian, UOB’s head of group commercial banking.
“To advance SMEs’ green initiatives, the UOB Sustainability Compass is an enabler for companies to overcome obstacles and kick-start their sustainability journey, in addition to our efforts to simplify sustainable financing for businesses,” adds Lian.
In addition, the survey found that around 90% of businesses acknowledge the importance of supply chain management within their businesses, especially in mainland China, Indonesia, Thailand and Vietnam.
However, most businesses are facing challenges of rising supply costs and challenges in procuring supplies as a result of inflationary pressures and increasing interest rates.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
In securing supply chain stability, the study reported three in ten businesses are making efforts to diversify their supply chain, adopt better management practices and implement data analytics for efficient decision-making.
The study also found that around four in five businesses have indicated that they have digitalised operations in at least one department and expect to invest more on digitalisation this year.
However, this poses several challenges such as cybersecurity concerns, high implementation costs and the lack of digital skillsets among employees throughout their digitalisation process.
Businesses surveyed indicated a desire for access to training programmes to upskill employees, exposure to the right technology and tax incentives to implement digitalisation.
