PETALING JAYA: Malaysia is a favoured expansion destination for Asean companies looking for growth opportunities in the region, according to Standard Chartered’s (StanChart) latest survey.
In its “Borderless Business: Intra-Asean Corridor” report, it noted that 49% of survey respondents had selected Malaysia as one of the countries offering the best expansion opportunities in Asean over the next 12 months.
The report also cited 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 vehicle segment and data centre supply. Malaysia is also seen as a leading medical device manufacturing hub and a regional market leader in medical tourism,” StanChart said in a statement yesterday.
Overall, it said the majority of Asean companies focusing on intra-regional opportunities expect robust business growth in the region over the next 12 months. Some 99% of respondents expect growth in production and 96% anticipate growth in revenue.
Access to the large and growing Asean consumer market (69%), access to a global market enabled by a network of free trade agreements (59%) and availability of an abundant and skilled workforce (49%) 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 expected to attract more investments into Asean, all respondents said they were planning to increase their investments over the next three to five years.
Within Asean, Malaysia is a major hub for investments, being the third-largest source for intra-Asean foreign direct investment (FDI) in 2019.
“While Covid-19 has somewhat dampened FDI sentiment globally, Malaysia remains a well-placed destination for companies looking for opportunities to diversify their supply chain and operations in Asean – with electrical and electronics, healthcare, automotive and e-commerce 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 the appetite for expansion with on-the-ground advisory and innovative financial solutions that meet local and cross-border needs,” said StanChart Malaysia managing director and chief executive officer Abrar A Anwar.
The survey also showed that companies recognised a wide range of risks in the region. The top three identified risks were the Covid-19 pandemic or other health crises (75%), geopolitical uncertainty and trade conflicts (60%), and the slow revival of the economy and the drop in consumer spending (49%).
StanChart also highlighted that respondents acknowledged the importance of adapting their business model to industry practices and conditions within Asean (67%), building relationships with suppliers and adapting supply chain logistics (66%), as well as understanding regional regulations, payment methods and infrastructure (53%) as among the most significant challenges in the next six to 12 months.
To drive resilient and rebalanced growth in Asean and mitigate these risks and challenges, StanChart said the surveyed executives identified entering new partnerships or joint ventures to increase market presence (53%), driving sustainability and environmental, social and governance initiatives (53%) and executing digital transformation programmes (52%) as the most important areas for their companies to focus on.
“To support their growth, they are seeking banking partners with strong cash management capabilities (52%), one-stop corporate financing and capital-raising services (52%), and extensive trade financing services (47%).”