Rich and potent in opportunities, Southeast Asia is one of the best places to start your business in today’s global ecosystem.
Any company looking for the market with an increased population, progressing technology and growing middle class must invest in Southeast Asia.
But, before boarding Vietnam Airlines or Thai Airways and going for a round of meetings, it’s better to be prepared for the obstacles that may come your way.
Some of the factors to keep in mind before doing business in Southeast Asia are:
- Distinct markets
The Association of Southeast Asian Nations (ASEAN) is a 10-nation intergovernmental body, that aims to boost cooperation among its members and facilitates the economics and business interests in the region.
Southeast Asia attracts many investors looking to take advantage of its huge population of over 660 million and the growing power of the middle class.
However, each member varies politically, economically, and socially. So, before moving your business to Southeast Asia, it’s important to look at ASEAN as an organisation of 10 unique and distinct markets, with:
- 9 official languages
- 10 currencies
- 10 distinct legal systems
- Distinct infrastructure
Each market is unique and offers a lot of opportunities for companies looking to expand.
Before moving your business to Southeast Asia, it’s important to have knowledge of various regional and local policies, immigration processes, and business registration regulations.
For instance, Southeast markets, such as Vietnam, the Philippines, and Cambodia, have certain restrictions on foreign direct investment (FDI). This means foreign investors are required to have both stakeholders and local partners to be approved before they set up a company in Vietnam.
In addition to above, corruption is also a real threat that businesses moving Southeast Asia need to consider to ensure a smooth setup of their business.
Pro tip: Do your research well in advance to know how you can enter a market.
- Recruitment risks
Finding the right employees to boost your business is hard. But, there are additional risks and challenges in Southeast Asia such as distinct levels of education, relevant industry experience, and language constraints.
One of the core objectives of the economic community of ASEAN is to have a free flow of skilled labour. However, this is still in the proposal stage. The ASEAN nations have their regulations, often strict and unclear when it comes to employing foreign talents.
For instance, the Ministry of Manpower of Singapore has a self-assessment employment test which tells you whether someone is fit to get an employment pass in Singapore or not.
Therefore, before setting up your business in Southeast Asia, check whether it is feasible to relocate staff or hire foreign workers to operate in-country.
- Different timescales
Western companies work as per the project deadlines. However, starting up a business in the East may not allow you to set project timelines. In case, you want to manage your timeline, you have to adjust your schedule. Some fields that may take time to manage are:
- Import licencing
- Documentation for business licencing
- Government legal rules & policies
Before entering a new region, make sure your timelines are genuine to deal with shareholder expectations.
- Various challenges
Opportunities always come with potential challenges to overcome.
Do your homework well in advance to understand the business environment and the culture of your target country. Some of the challenges you are likely to face are:
- The economic difference, as some of the markets are far progressive than others;
- Different complexity levels of doing business across the markets: there are well-developed business centres such as Indonesia and some markets that have just opened to foreign investment, such a Cambodia and Myanmar;
- Local and regional regulations such as licence requirements and data protection rules;
- Government help for foreign businesses – this depends on the chosen country. Some have simple laws while others have bureaucratic laws that may hinder the process to register a company.
It’s important to know that the rules of one country would be different from the next target country.
In the end…
Most companies looking to invest in ASEAN market choose Indonesia or Vietnam as a launchpad. These countries have efficient government agencies, growing middle-class, better economic growth, and the great business environment compared to most of the neighbouring countries.
Whichever market you choose, it’s always better to do some homework to overcome challenges that may hinder the process of setting up a company.