A guide to South East Asia - some deep, data-driven analysis of growth opportunities in South East Asia, prepared by our Accenture team in Singapore. The paper covers macro-economic factors (e.g. GDP, population and income trends) and vertical, industry-specific research across the ASEAN countries. If you want to get your head wrapped around South-East Asia and start with the basics, this paper is the perfect place to begin with!

1. Destination South East Asia:
A Joint Pathway to Future Growth?
Opportunities for Regional
Business Expansion

2. 1

3. Contents
Introduction 4
A Guide to South East Asia 6
The Regional Landscape 6
Top Destinations: Sources of Growth 12
Local Attractions: Building on Complementary Strengths 14
The South East Asian Consumer 16
Social Fabric: Young, Educated, Diverse 16
Evolution of a Consumption Culture 19
The Road Ahead: Growth Paths for the Region 22
The Role of the Free Market 24
Conclusion 25
2

4. “One’s destination is never a place but
rather a new way of looking at things.”
1
3

5. Introduction
Well known for its beaches, rice fields, Asian nations is giving birth to a new By recognizing sometimes opposing,
rainforests, cultural and culinary regional business destination. But yet complementary strengths, the
attractions, South East Asia is not only will that destination be attractive South East Asian economies can seize
a popular tourist destination, but a fast enough for business expansion the window of “regional” growth
evolving economic community. This and under what conditions? opportunity. This paper suggests that
destination is a showcase of distinct the future growth of this buoyant
cultural, social and political identities South East Asia remains a region will be influenced by the
encompassing 10 nations: Brunei heterogeneous region which continues appetite of businesses to recognise the
Darussalam, Cambodia, Indonesia, to face several challenges on its potential of rising consumption power,
Laos, Malaysia, Myanmar, Philippines, journey towards becoming a unified and regional ‘scale’ opportunities.
Singapore, Thailand and Vietnam. economic powerhouse. In this paper, However, the conditions for expansion
Accenture explores the attractions of a of regional and global businesses will
These 10 countries are formally cohesive South East Asian region as a vary widely across South East Asian
known as the Association of South new source of business opportunities. nations and significant improvements
East Asian Nations (ASEAN) – a will be required to enable stronger free
region on a journey towards Our research indicates that several market activity.
becoming an integrated and opportunities exist within national
prominent economic powerhouse.2 as well as regional borders as South Market-driven intervention across
East Asian nations continue to build national borders will play a critical
By 2020, the region is expected to and grow their economies. These role in furthering economic growth
be among the world’s 10 largest range from meeting investment across the region. To accelerate this
economies and the fourth largest demands in less developed nations process, a shared effort between
in Asia. The demographic fabric will or leveraging existing advantages in ASEAN governments and businesses
consist of more than 650 million certain sectors such as high value- to identify, chart and co-develop a
people, most of whom will be middle add manufacturing, to opportunities joint pathway can potentially act as an
class, educated and aged below 30, that are driven by increasing important catalyst for regional growth.
with rising disposable incomes and consumer demands or complementary
a strong appetite for consumption. strengths across the region. The journey has already begun: are you
A growing consumer market and ready?
significant economic integration
efforts across the 10 South East
4

6. “The whole object of travel is not to
set foot on foreign land; it is at last
to set foot on one’s own country
as a foreign land.” 3
5

7. A Guide to South East Asia
The Regional Table 1: ASEAN Member Nations
Landscape
Brunei Darussalam
Cambodia
Established in August 1967, the Indonesia
Association of South East Asian Laos
Nations (ASEAN) is a political, Malaysia
economic and cultural organisation Myanmar
of 10 member countries [see table
The Philippines
1]. In recent years, these nations
have embarked on a journey towards Singapore
greater cooperation and integration, Thailand
recognising that a cohesive region Vietnam
can achieve a higher potential
and create a strong economic
position in Asia and beyond.
6

8. Accenture analysis indicates that a Development of a regional economy Transitioning high-growth
more cohesive South East Asian region is a journey of many challenges,
could reinforce its competitiveness most notably the lack of an effective economies
amongst the world’s top 10 economies supra-national authority; strong The landscape of this region is like
within 10 years. By 2020, the region’s nationalism; persistent political an archipelago – a chain of unique
real GDP is projected to reach US$1.9 tensions and instability; wide disparity islands, each richly inhabited by a
trillion, albeit at a modest growth rate in social-economic progress; and complex identity. As one navigates
of 5 percent [see figure 1]. ambiguity in building an ASEAN through this landscape, the passage
identity. These challenges will pose will be marked with high contrasts
The region’s economic and business significant risks and possibly delay the and many transitions. Each nation
landscape is dominated by Indonesia, planned economic initiatives aimed at is at a different stage of economic
Malaysia, the Philippines, Singapore, accelerating regional growth. development, from less mature
Thailand and Vietnam, known
markets such as Laos and Cambodia,
collectively as the ASEAN 6. All Greater attention needs to be given to
to developing economies such
nations across the region display the role of market-driven intervention,
as Indonesia and Thailand, fast
healthy growth prospects, and and particularly the expansion of
developing Malaysia, and the highly
the ASEAN 6 will continue to play business activity in driving future
advanced economy of Singapore.
dominant roles in driving economic growth across the national borders of
growth in the future. the region. [Figure 2] illustrates the current
stage of development4 across the 10
To accelerate the transition to a single Accenture believes the journey to a
economies in South East Asia and the
market and production base by 2015, stronger economic community can be
expected growth prospects. Many
the ASEAN Economic Community navigated more effectively through
nations, including Cambodia, Laos,
[see table 2] was formed in 2007 to increased market liberalisation.
Myanmar, the Philippines and Vietnam,
promote regional cooperation and
remain at the factor-driven stage,
integration.
and are highly dependent on natural
resources, mainly unskilled labour
and capital investments to stimulate
growth and increase competitiveness.
Figure 1: South East Asia Real GDP, 2010–2020
US$ Bn 2020 South East Asia Combined GDP = US$1,901 Bn
$700 8%
$600 6.8% 7%
6.5%
6%
$500 5.5%
South East Asia GDP CAGR = 5%
4.9% 5%
$400 4.8% 4.6%
4.5%
4.3%
4%
$300
2010 - 2020 CAGR
3%
2.8%
$200
2%
1.7%
$100 1%
$0 0%
Indonesia Thailand Malaysia Singapore Philippines Vietnam Myanmar Brunei Cambodia Laos
2010 Real GDP 2020 Real GDP 2010 - 2020 CAGR
Source: Accenture Analysis of data from IHS Global Insights, 2011.
7

9. Table 2: The ASEAN Economic Community
The ASEAN Economy Community, the Key development areas include: Equitable economic development
ASEAN Political-Security Community
A single market and production base • Develop small and medium
and the ASEAN Socio-Cultural
enterprises (SMEs)
Community are the three pillars • Liberalise and facilitate the free flow
established by the ASEAN organisation of goods, services, investment, capital • Facilitate effective cooperation
to enhance regional cooperation and and skilled labour and mutual assistance to narrow
integration in building an ASEAN the development gap of Cambodia,
community by 2015. • Accelerate regional integration Laos, Myanmar and Vietnam (CLMV)
across 12 priority sectors countries
The vision is to create a highly
• Enhance trade and the long-term
competitive single market that Integration into the global economy
competitiveness of ASEAN’s food,
promotes equitable economic
agriculture and forestry products/ • Negotiate free trade agreements and
development for member states, as
commodities comprehensive economic partnership
well as facilitating their integration
agreements with major trading
with the global community. Towards a competitive economic partners
region
Source: ASEAN Economic Community Scorecard:
• Lay the foundation for competition Charting Progress Towards Regional Economic
Integration, ASEAN Secretariat, March 2010; ASEAN
policy, and consumer protection Economic Community Blueprint, ASEAN Secretariat,
January 2008.
• Strengthen intellectual property
rights [IPR] protection
• Develop transport (maritime, land,
air, transport facilitation and logistics
services), ICT and energy infrastructure
Figure 2: South East Asia Economics – Stage of Economic Development, 2010
1. Factor Driven 2. Efficiency Driven 3. Innovation Driven
7.5%
Vietnam
6.5%
Cambodia
Laos Indonesia
5.5%
Myanmar Malaysia
Thailand
Singapore
4.5% Philippines
Real GDP 2010-2020 CAGR
Transition from Stage 1 to 2
Transition from Stage 2 to 3
3.5%
Brunei’s economy is categorised
as one in Transition 1-2 due to
2.5% its dependency on oil and gas.
Brunei
1.5%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 37 47
Nominal GDP per capita, 2010 (US$‘000s)
Note: Stage of economic development is based on World Economic Forum’s Global Competitiveness Report 2009-2010
Source: Accenture Analysis of data from IHS Global Insights, 2011.
8

10. Figure 3: South East Asia Population Growth, 2010–2020
Mn
300 2.0%
1.7%
250 1.6%
1.6% 1.6%
1.5%
200 1.4%
1.2%
150 1.0%
0.9%
0.9%
0.8%
100
2010-2020 CAGR
0.5% 0.5%
50
0 0.0%
Indonesia Philippines Vietnam Thailand Myanmar Malaysia Cambodia Laos Singapore Brunei
2010 Population 2020 Population 2010 - 2020 CAGR
Source: Accenture Analysis of data from IHS Global Insights, 2011
Malaysia and Thailand have focus on the services sector – to shift continued evolution of a large
transitioned into the efficiency- towards an increasingly efficient consumer market and potential labour
driven stage of development, where economy that would generate higher workforce [see figure 3].
efforts have been channelled towards productivity and income levels. The
developing more efficient processes to productivity agenda is strongest in an Despite the availability of a large
improve overall productivity levels for innovation-driven economy such as labour force base, particularly in
both nations. Singapore, the region’s Singapore where government spending the ASEAN 6 which will be home
most advanced economy with the is focused on continuing education to to 300 million workers by 2020,
highest GDP per capita, is considered enhance its innovative capabilities. improving labour productivity
to be an innovation-driven economy. will become more critical.
It relies on sophisticated production Greater regional cooperation and
processes and innovation to produce integration could aid South East The highest population increases
new and unique products so that Asian nations in accelerating their are expected in the less developed
higher wages and the associated voyage to the next stage of economic nations, putting pressure on their
standards of living can be sustained in development. For example, timely ability to improve economic output
the long term. intra-regional supply of skilled labour and competitiveness.
and capital by more mature markets
A country’s stage of economic to factor-driven emerging economies For the South East Asian region to
development is also reflected by could assist in increasing economic maintain its historic GDP growth
government priorities and investments output for the region. rate since 2000, the International
in specific sectors. For example, in Labour Organization [ILO]5 estimates
that productivity growth needs
factor-driven economies such as Labour workforce to accelerate from 3.3 per cent in
Indonesia, the Philippines and Vietnam,
government agenda are focused on productivity 2000–2006 to approximately 4.1 per
investing in infrastructure to facilitate cent in 2007–2015. In particular, there
The region is projected to support is strong pressure on Cambodia, the
economic growth and directing a combined population of over 650
resources to improve education and Philippines, Singapore and Thailand to
million by 2020, accounting for 8.6 improve their productivity rates.
health, as well as to reduce poverty. per cent of the global populace.
Malaysia has defined 12 economic Population growth is expected across
development areas – with a strong all South East Asian nations, signifying
9

11. Figure 4: South East Asia Foreign Direct Investments
Source Country Breakdown
(3yr Cumulative FDI Stock)
30%
25%
20%
15%
10%
5%
0%
Europe NAM South East Japan ME and South China ANZ Taiwan India Hong Rest of the
Asia Africa Korea Kong World
2004-2006 2007-2009
Source: Accenture Analysis of data f rom f Di Markets, 2011.
In response to this need for greater Greater capital availability in the
labour productivity, South East Asian region would help expand high-
governments have been investing potential industry sectors. Accenture
heavily in education in recent years. believes that the region’s more
Most notably. education spending developed economies could become
accounted for one of the largest central investment engines for
budget expenditures in 2010 across neighbours that rely on capital
the ASEAN 6. inflows. Already, Malaysia’s foreign
direct investments in neighbouring
Capital investment nations has grown to account for more
than half of the total intra-regional
Capital investment is a key driving investment inflows during 2007–2009.
factor in expediting economic growth.
Over the last decade, the region has
capitalised on its highly productive
labour force to attract foreign
direct investment, particularly in the
manufacturing sector.
One way to reduce the region’s
exposure to investment fluctuations
arising from global economies’
performance is to stimulate
intra-regional capital flows. Such
investments have more than doubled
in contributing to the overall foreign
direct investment inflows into the
region, from 6 per cent during 2004–
2006 to 16 per cent during 2007-2009
[see figure 4].
10

12. “The real voyage of discovery consists
not in seeking new landscapes but in
having new eyes.”
6
Figure 5: South East Asia GDP Breakdown
In US$ Mn
$1,200
$1,000
$800
$600
$400
$200
$0
1970 1980 1990 2000 2009
GDP Household Consumption Expenditure Investment
Government Consumption Expenditure Net Exports
Source: Accenture Analysis of National Accounts Main Aggregates Database,
United Nations Statistics Division, 2011.
11

13. Top Destinations: direct investment at pace with China,
the world’s top destination for foreign
The region can further boost economic
resilience by leveraging geographic
Sources of Growth capital. Despite suffering a dip during
the 2008-2009 global financial crisis,
proximity to increase intra-regional
trade and maximise the free flow of
To achieve economic growth across foreign direct investment levels have goods, services, investment and talent
the region, the South East Asian slowly rebounded in 2010, reflecting between nations.
nations need to collectively address global confidence in South East Asian
the development gaps between larger economies’ growth prospects. Initial regional integration efforts
and smaller economies. Instead of by the ASEAN Economic Community
have already facilitated the ASEAN
treating differences as a hindrance, Inter-connectedness Free Trade Agreement [AFTA] that is
the region could seek out and leverage
complementary strengths to potentially Trade has been integral to South East critical in increasing trade flows within
accelerate regional growth prospects. Asia since the beginning of the Spice the region. Notably, intra-regional
Trade in Asia. The region has enjoyed exports have increased over the last
An integrated South East Asian trade growth over the last decade and decade, accounting for 34 per cent of
economy is heavily dependent on showed relative resilience during the total South East Asia exports in 2009
consumption to drive economic recent financial crisis. However, there compared to 23 per cent in 2001.
growth, more so than its counterparts is a strong reliance on imports driven Import trends also reflect an increasing
in other economies globally. In 2009, by consumption demand. While the dependency on neighbouring countries
consumption accounted for 58 per larger South East Asian economies in the region [see figure 6].
cent of the region’s GDP, compared to contribute the most to total trade
23 per cent for investment, 11 per cent value, there is potential for export- While tariff levels are decreasing,
for government expenditure and 8 per driven growth from the resource-rich the region has to be vigilant and
cent for net exports [see figure 5]. smaller economies. Facilitating trade prepared for potential hindrances to
agreements between ASEAN as a the integration process, for example
However, in the past 10 years, the single unit with major trading partners following through on commitments
role of investment and trade in could strengthen the negotiating to agreements, the use of non-
stimulating economic output has power of these individual nations. tariff barriers and independent
become increasingly prominent. Since actions of individual nations to
2003, the region attracted foreign protect national interests.
Figure 6: South East Asia Exports and Imports
South East Asia Export South East Asia Import
Destination Breakdown Source Breakdown
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
34%
10% 23% 10% 24%
20%
0% 0%
2001 2009 2001 2009
Extra-regional Exports Intra-regional Exports Extra-regional Imports Intra-regional Imports
Source: Accenture Analysis of data from Euromonitor International, 2011.
12

14. “A man travels the Shifting sector advantage to China for regional and global
businesses. Given the region’s varying
With the exception of Singapore,
world in search of the South East Asian nations have
levels of manufacturing sophistication,
we expect to see a build up of an eco-
traditionally relied on their rich natural
what he needs and resources to drive economic growth.
system in which certain economies
will continue to focus and improve
The relative size of these sectors (i.e. their core manufacturing capability
returns home to agriculture, mining and utilities) in
certain economies, such as Brunei
while others will continuously
advance towards higher value-add
find it.”
8
Darussalam, Cambodia, Laos, Malaysia manufacturing. In parallel, Malaysia,
and Myanmar will continue to offer the Philippines and Singapore are
opportunities for investors. building a strong services sector by
driving investments and business
The push for infrastructure activities in industries such as financial
improvement region-wide to services, information technology,
improve ease of doing business tourism and business services.
and productivity will also
drive investments, particularly The increased focus and facilitation
in construction, transport for specialised manufacturing hubs
and communications. and regional services industries could
enable South East Asia to diversify its
Our analysis reveals that the region is future economic growth model.
increasingly shifting its comparative
advantage from the primary sector
towards export manufacturing and
high value-add services [see figure
7]. The potential of the region’s
manufacturing sector, across the
ASEAN 6 nations, positions it as an
alternative production destination
Figure 7: South East Asia GDP Sector Value-add Contribution
6%
4%
Sector Value Weight Change 1989-2009 (as % of GDP)
2%
Transport, storage, Manuf acturing
communication
0%
Other Activities (Financial &
Construction Wholesale, Retail, Business Services
-2% Restaurants, Hotels
Mining, Utilities
-4%
-6%
-8% Agriculture, Hunting, Forestry,
Fishing
-10%
0% 5% 10% 15% 20% 25% 30%
2009 Sector Value-add Contribution to GDP (%)
Size of Bubble – 2009 Value-Add Contribution (US$)
Source: Accenture Analysis of National Accounts Main Aggregates Database, United Nations Statistics Division, 2011.
13

15. Sub-regional growth 2. Manufacturing Local Attractions:
clusters Establishing a single production
Taking into consideration the relative
base across the ASEAN 6 could Building on
strengthen the region’s manufacturing
sector strengths and development
priorities across the 10 economies,
capabilities. The manufacturing Complementary
sector accounts for at least 25 per
Accenture has identified several
growth opportunities at the sub-
cent of Thailand’s output in 2009 Strengths
and contributes to around 20 per
regional level. Three sectoral growth South East Asian businesses and
cent of Indonesia, Malaysia, the
clusters deserve attention: global multinational corporations
Philippines, Singapore and Vietnam’s
with interests in the region do not
GDP. Intra-regional collaboration
1. Agriculture have to venture far to find high
presents opportunities for utilising
potential new destinations. Several
Opportunities for joint intra-regional manufacturing complementarities,
complementary strengths exist
development could involve taking e.g. inputs for specialised
across South East Asian economies
advantage of growth clusters across manufacturing can be produced
that provide a foundation for strong
specific economies. For example, and supplied by low-cost locations
economic growth, and thus potential
transforming South East Asia’s four within the region. Reliance on
for increased business activity:
smallest economies (Brunei, Cambodia, imports from outside of the region
Laos and Myanmar) into the region’s could be significantly reduced. 1. Continuing cooperation between
agricultural hub could increase export South East Asian nations will further
capacity, while improving long-term 3. Services drive intra-regional trade, facilitate
food security across the region. Other intra-regional growth capital flows and strengthen economic
opportunities exist in the mature reciprocity, all of which are crucial
Furthermore, the Brunei Darussalam- to the region’s development. Labour
services markets such as Singapore,
Indonesia-Malaysia-Philippines East productivity, in particular, will
Malaysia and to an extent, the
ASEAN Growth Area (BIMP-EAGA) determine the speed and ease of
Philippines. These economies are
initiative will be implemented in regional economic advancement.
building strong financial and business
mid-2011 to strengthen collaboration
services industries, and will offer
in agriculture and fisheries across 2. Adopting a diversified economic
opportunities for greater specialization
the four countries. As part of growth model would strengthen the
that can be exported to the rest of the
this initiative, the countries will region’s long-term competitiveness.
region. For example, Singapore, with
consider trade facilitation measures A collective view and focused effort
its strong education and biotechnology
and food regulation and control in stimulating potential sectoral
hubs, can provide training and R&D
standards to help reduce the cost of growth clusters across specific
expertise across the region. The region
food products and increase intra- economies provide joint development
could also leverage the Philippines’
regional trade in agriculture. opportunities that can accelerate
strength and economies of scale in the
provision of outsourcing services. regional growth prospects.
If productivity trends remain at 2008
levels, the region is expected to 3. The region is clearly aware of its
The examples of sectoral ‘growth
produce US$27 billion in additional potential as an emerging economic
clusters’ across specific economies
agricultural output by 2015. powerhouse, with governments
provide opportunities for joint
However, if average annual growth actively pursuing a regional
development that can be applied
in agricultural labour productivity integration agenda that will clear
to advance the regional economic
were to accelerate by just 1 per cent a path to a single market.
development journey.
over 2007–15, the region would
generate an additional $10 billion per The South East Asian macro-economic
year by 2015. A boost in agricultural landscape provides vast opportunities
productivity would contribute to for regional business expansion,
economic growth, lower food prices which are expected to fuel private
and improvement in rural incomes.7 consumption – a key economic driver.
But the true potential lies in the
highly diverse and rich social fabric of
this region that signifies a continued
evolution of a large consumer market.
Understanding this complex market is
a pre-requisite for businesses to assess
the benefits of future consumerism in
South East Asia for business growth.
14

16. “The great difference between voyages
rests not with the ships, but with the
people you meet on them.” 9
15

17. The South East Asian Consumer
Social Fabric: Youthful population Asian landscape, an increasing number
of people will choose to form a family
The region’s population is projected to
Young, Educated, reach more than 650 million people
at a later life stage. The region’s large
younger population will have profound
by 2020, half of which will be aged
Diverse under 30 [see figure 8]. Although
impact on future consumption across
the region.
The South East Asian region is a family-oriented social structures will
rich and highly diverse collection continue to dominate the South East
of distinct cultural values and
national identities, both of which
Figure 8: South East Asia Population by Age Group
will influence the development
of a new consumer mindset. 120,000
Consumers will play a critical role in
100,000
driving economic growth in the region.
Demographic shifts, including rising
purchasing power, a younger, better 80,000
educated population and increased
urbanisation, will create a consumer 60,000
market with distinct needs and strong
buying power. The fusion of different 40,000
Thousand People
social fabrics will open the door for
new business opportunities. 20,000
0
0-9 10-19 20-29 30-39 40-49 50-59 60-69 70+
Years old
2000 2010 2015 2020
Source: Accenture Analysis of data f rom Euromonitor International, 2011.
16

18. Income class transitions business models similar to those that expenditure category across South
have proven to be successful in other East Asia. Those aged below 20
Expected future growth in consumer emerging markets (e.g., China, India). will drive demand for primary and
expenditure indicates increasing secondary education. More than 380
maturity of the consumer market The growing affluence of the million people are expected to attain
across South East Asia. Consumer upper-middle class in more mature at least primary education by 2020,
expenditure growth will substantially economies such as Malaysia boosting literacy standards across the
exceed historical levels, reaching and Singapore will become region. An increased number of adults
US$1.5 trillion by 2020. Disposable increasingly important for the in the region are also expected to
income levels are expected to increase region in driving demand for high- pursue higher education.
– but the relative gap across the value products and services.
economies will remain. The prevalence of larger households
Transition of households from low to
Distinct purchasing needs (four to five people) will continue to
drive demand for essentials such as
middle class10 income segments will and expectations housing, transport and food. With over
be the catalyst for future domestic 40 per cent of the region’s population
With their growing purchasing power,
consumption [see figure 9]. continuing to live in rural areas, there
consumers across the region will
have a greater appetite for education, will be a higher demand for mobile
The relative size of the middle class communications, although poor
will help create aggregate purchasing household goods and services,
communication and entertainment infrastructure in rural Indonesia, the
power that will exceed that of the Philippines, Thailand and Vietnam may
smaller premium income households. [see figure 10].
constrain wired connectivity.
By 2020, middle class households
Demand for premium products and
across South East Asia will have an Consumers are also expected to invest
services are expected to be driven
aggregate purchasing power of at in health and financial security due
from consumers in more mature
least US$0.75 billion as compared to to the lack of a strong social security
markets due to their higher income
US$0.5 billion offered by households system in some countries.
levels. For example, consumers in
with greater than US$75,000 in annual
Malaysia and Singapore have a
disposable income. In summary, consumers in developing
higher affinity to spend on high-end
economies will direct a large portion
Despite the healthy growth of the consumer electronics and household
of their disposable income towards
middle class, low-income households durables, medical and health-
improving general living standards,
will continue to be the backbone of related products, higher education,
whereas mature markets will show a
the region’s economy. This dominant entertainment and travel.
growing propensity to save and build
segment represents business wealth for the future [see figure 11].
A large young population will make
opportunities that may be realised
education the fastest-growing
by adopting innovative and simple
Figure 9: ASEAN 6 – Number of Households by Annual Household Disposable Income
60,000
Middle Class Income Segments
50,000
40,000
Number of Households (‘000s)
30,000
20,000
10,000
0
>US$100,000
>US$10,000
>US$15,000
>US$25,000
>US$35,000
>US$45,000
>US$55,000
>US$65,000
>US$75,000
>US$1,000
>US$2,500
>US$5,000
Annual Household Disposable Income Category
2000 2010 2015 2020
Source: Accenture Analysis of data f rom Euromonitor International, 2011.
17

19. Figure 10: Consumer Expenditure by Category, 2000–2020
US$ Bn
$400
$350
$300
2010-2020 CAGR:
$250 8.2% 2010-2020 CAGR:
$200 6.5% 2010-2020 CAGR:
10.2%
$150 2010-2020 CAGR:
6.6%
$100
$50
$0
Food and Beverages
Health Goods and
Financial Services
Household Goods
Communications
Medical Services
Clothing and
and Services
Alcohol and
Leisure and
Hotels and
Recreation
Education
Insurance
Transport
Footwear
Catering
Housing
Tobacco
Others
2000 2010 2015 2020
Source: Accenture Analysis of data f rom Euromonitor International, 2011.
Figure 11: ASEAN 6 – Savings Ratio relative to Expenditure Growth, 2020
9% Size of Bubble – Average Household Disposable Income (US$)
8%
Vietnam
7%
6% Indonesia
5%
Malaysia
Expenditure Growth
Philippines
4%
(10Y 2020 CAGR)
Thailand
3% Singapore
2%
1%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Savings Ratio, 2020 (Percentage of Disposable Income)
Source: Accenture Analysis of data from Euromonitor International, 2011.
18

20. Figure 12: ASEAN 6 – Consumer Attributes
Attributes Indonesia Malaysia Philippines Singapore Thailand Vietnam
Expenditure Growth
Income Growth
Average Disposable
Income Size
Propensity to save
Household Income
Distribution
Potential Market Size
Age
Education
Mobility
Connectivity
Urbanisation
Relevance High Low
Source: Accenture Analysis
Evolution of a propensity to save, expenditure
growth, household income distribution
Givers
Givers are aged 35-50, upper-
Consumption and potential market size expected by
2020 [see figure 12]. Based on these middle class consumers with a busy
professional life. They tend to be
Culture attributes, we predict the evolution of
seven key consumer segments in the married with young children with lives
With the continuing role of region by 2020: revolving around work and family. Most
consumption in driving economic of their leisure time is spent with family
and their spending too is focused on
growth across South East Asia, it is Premium Silvers the long-term welfare of the family.
critical to gain a better understanding
of the common consumer attributes They may be aged 60+ and retired, but They focus on saving for the future.
across the region. Understanding Premium Silvers are still leading full,
healthy lives. Their high disposable This sizable segment with high
these attributes will assist businesses
income allows them to cultivate disposable income is represented
in tailoring their products and
new hobbies and stay active in the across ASEAN 6 nations by 2020,
services to meet the expectations
community. They may be affluent with relatively higher concentration in
of different consumer segments,
but they spend their money wisely, Malaysia and Indonesia.
and test the extent to which similar
segments can be targeted using preferring to buy things that offer
a common business model. good value. As they get older, Premium Opportunists
Silvers are increasingly reliant on
medical services and products. Opportunists belong to the hard
Based on common demographic and
working, above 35 years of age
lifestyle shifts observed across the
Though small in size, this segment consumers who live in rural or city
region, Accenture has identified a
has high disposable income. Well fringe areas. Most of them are married
distinct set of attributes that can
represented across ASEAN 6 nations and have children. With low / no
be used to describe the South East
by 2020, and particularly in Singapore education, they tend to rely on lower
Asian consumer of the future. These
and Malaysia. incomes (<US$5,000 per annum) and
attributes include age, education,
may need to depend on social system
mobility, connectivity, urbanisation
support at times. They have limited
(where they live), income growth,
spending power and will focus on
average disposable income size,
meeting their families' essential needs.
19

21. By 2020, the Opportunists will remain
the dominant segment across ASEAN,
Young Connectors “Consumer profiles and
with high concentration in Indonesia, Technology dominates the lives of
Young Connectors and they spend a
behaviours are very
the Philippines and Vietnam.
considerable portion of their income similar across certain
and time on entertainment and media.
New Royals As students aged 15 to 24, this money ASEAN countries, for
These are young singles earning a
healthy income from their high-flying,
comes from allowances or part-time
jobs. They use mobile devices to
example, between
white collar jobs. New Royals are aged connect to social networking sites so Laos and Cambodia,
between 20 and 35 and well educated. they can stay connected with friends.
Their independence allows them to and Singapore and
This sizable segment is largely
seek new experiences through travel
or employment opportunities. Personal dominated by Indonesia, the Malaysia. We have
enrichment is a significant buying Philippines and Vietnam given their
higher concentration of younger
similar tastebuds
motive with high brand affinity and
latest introductions. population of these countries by 2020. and a strong eating
Given their propensity to spend, this Increasingly, large businesses in the out culture.”
premium segment will be significant region are tailoring their products
Lerssak Boonsongsup, Group Director
by 2020. New Royals can be found and services to meet the needs and
of Global Supply Chain Management,
across ASEAN 6 nations by 2020, expectations of the South East Asian
Minor Food Group
with relatively higher concentration in consumer. For example, Malaysian-
Indonesia and Malaysia. based bank CIMB has provided an
avenue for consumers such as the
Givers and Value Seekers to start
Trend Seekers saving and investing for the future.
Trend Seekers are young singles Without the Sharia-compliant banking
who are brand conscious and aspire products, the Muslim communities in
to be part of the ‘in-crowd’. With the region were not able to participate
an average-paying job but high in banking activities for commercial
propensity to spend, they may have and religious reasons previously.
to rely on credit to fund purchases at
times. Aged between 20 and 35, they To meet the growing demand for
tend to place importance on following affordable air travel amongst the
the latest fashion trends. young and sophisticated travellers
such as the New Royals, Air Asia
Even with a lower income threshold, launched its’ low-fare, long haul
Trend Seekers will be an attractive proposition in 2007 with great
segment given their relative size. success. The company’s continued
Though dominant in Indonesia, this focus on customer needs and value
segment has fair representation creation is becoming more relevant
across Thailand, Malaysia, the to the South East Asian consumers
Philippines and Vietnam as well. as they seek to enrich their lives by
exploring new travel destinations
Value Seekers within the region.
The Value Seekers are aged 35-60 This is only the beginning: the
consumers who live in rural or city evolving consumer power and identity
fringe areas, rising up to become across the region provide attractive
the new middle class. Most of them opportunities for businesses that are
are married and have children. ready to understand the differences
Although not highly educated, and leverage similarities of the South
they are determined to provide a East Asian consumer of the future.
better life for their children. With
some disposable income on hand,
they tend to look for bargains and
good value for money purchases.
The second largest segment by
2020, Value Seekers can be found
mainly in Indonesia, Thailand,
Vietnam and the Philippines.
20

22. “If you want to succeed you should strike
out on new paths, rather than travel
the worn paths of accepted success.”
11
21

23. The Road Ahead: Growth Paths for the
Region
You’ve done the grand tour of South
East Asia and seen the major regional
Economic Development – Growth
priorities differ based on each South
“ASEAN businesses are
attractions. As a seasoned traveller, East Asian nation current stage of likely to expand to
what you really want to do is uncover economic development. Less mature
the hidden gems – the sights and markets need to focus on building meet China’s demand
experiences that are yet to be
discovered by the masses.
basic infrastructure and institutional
frameworks to lay a strong foundation
needs. Strong oil and
In business as in travel, the key to
for sustainable growth. The growth commodity prices offer
agenda is applicable for more
success is the ability to recognise developed nations where increasing other stimulants for
opportunities and capture those faster productivity and efficiency will enable
than competitors. Two emerging the respective economies to progress. region-centric or niche
forces are set to shape the future
of economic growth in the South
expansion. Political
East Asian region: market focus and and economic stability
economic development imperatives.
for countries in the
Market Focus - Economic growth
in the region can be spurred by region is a precursor
improving individual nations’ global
competitiveness through further
for ASEAN business
investments and specialization in expansion.”
the respective economies. In parallel,
a market focus that transcends Alan Hamzah Sendut, Chief Strategy
national borders will enable Officer, Sime Darby Berhad
South East Asia to build regional
competitiveness by leveraging
on complementary strengths.
22

24. Based on these forces, four growth 2. Domestic specialisation 3. Regional scale
paths are projected [see figure 13].
This growth path involves leveraging Regional scale requires building
mature sector capabilities to increase deeper ties with neighbouring
1. Investment exports and improve competitiveness economies through investment
accumulation against other Asian counterparts. in complementary capabilities to
For example, Singapore is likely to improve productivity. An example
Investment accumulation involves
leverage a highly skilled workforce to of this is the implementation of
accelerating infrastructure
continue developing a high value-add the BIMP-EAGA in mid-2011 to
development and social welfare
manufacturing sector. The Philippines strengthen collaboration in the
investments to increase economic and
could build on its business process agriculture and fisheries industries
social stability. For example, Vietnam
outsourcing capabilities to become across relevant countries. Regional
and the Philippines are looking to
the regional hub for these services. scale opportunities exist in agriculture
build basic social services for the poor,
Opportunities exist in low-cost and manufacturing. For these
while Indonesia requires infrastructure
and specialised manufacturing, oil opportunities to come to fruition,
to improve transportation and
and gas, refineries, and IT services. there must be true economic
communication. Opportunities exist
Success depends on a commitment to reciprocity based on intra-regional
in construction, transportation and
technology investments and on-going strengths; a commitment to building
logistics, basic healthcare, education
innovation; access to labour with a regional industry support network;
and financial services sectors. Critical
specialised skills (either by building and a commitment to joint technology
success factors include access to
domestic talent or importing skills); investments and on-going innovation.
foreign capital; a commitment to
and improving labour productivity
building well-developed transportation
to create cost advantages within the 4. Consumerism
and communications infrastructure;
domestic economy.
investments in the provision of basic An opportunity exists to leverage
education and health services; and the the purchasing power and common
establishment of a stable and quality needs of consumers to fuel regional
institutional environment. domestic demand, while investing
in services to strengthen regional
comparative advantage. Key
developments in this area include the
implementation of a cross-border
Figure 13: Future Economic Growth Paths for South East Asia trading platform for retail investors
in Singapore, Malaysia, Thailand and
Grow
the Philippines; and the development
of a common tourism curriculum
and competency standards for
tourism professionals. Opportunities
exist in tourism, financial services
and telecommunications. However,
Domestic Consumerism
there needs to be a commitment to
Specialisation
servicing the ASEAN consumer as a
single market; and liberalisation of
the services sector to encourage more
Domestic Regional market competition.
Accenture believes the future
economic growth of the South East
Investment Regional Asian region will require measures to
Accumulation Scale strengthen domestic consumption;
improve the investment climate and
social infrastructure; develop the
financial system; and deepen regional
integration and cooperation.
Build
Source: Accenture Analysis
23

25. The Role of the demand for shrink labels, packaging
materials and packaging machines
Free Market in Vietnam and across the region.
We believe the regional growth Of course, the diversity of the region
trajectory will be influenced by the means conditions for expansion
appetite of businesses to recognise will vary widely [see figure 14].
the potential of rising consumption, The ASEAN 6 offers the best
and ‘scale’ opportunities across opportunities, albeit at different risk
national boundaries. Depending points, due to their mature economic,
on businesses’ growth models, the political and social structures.
business expansion potential varies
across the four growth scenarios. Regional expansion will require active
enablement, particularly in the areas
Businesses can play prominent roles of talent availability, political and
in driving economic growth across social stability and pro-business
the South East Asian region. For policies, to name just a few.
example, the Japan-based Fuji Seal
Group has decided to strengthen Businesses looking to expand in
its presence in South East Asia by South East Asia will have several
capitalising on Vietnam’s low-cost growth paths to consider. While some
manufacturing environment. The may choose to focus on a particular
company’s estimated US$15 million economy initially, we expect to see
investment validates Vietnam’s a regional footprint to be developed
increasing competitiveness as a over time.
manufacturing hub. Beginning
March 2012, its’ manufacturing and
sales base in Vietnam will be well-
positioned to respond to the growing
Figure 14: South East Asia Business Expansion Opportunity Landscape
5
4 Myanmar
Cambodia Laos
Increasing risk for doing business
3
Thailand
Vietnam
Philippines
Indonesia
2 Malaysia
Brunei
1 Singapore
Risk Rating
0
10 30 50 70 90 110 130 150 170 190
Ease of Doing Business Ranking
Increasing regulatory complexity of doing business
Note: Myanmar is Real GDP 2020 (US$ Billion)
Size of Bubble – not included in the Source: Accenture Analysis of Individual
“Ease of Doing Business” ranking and is Country Reports, IHS Global Insight, 2011;
given the lowest ranking for the purpose of “Ease of Doing Business”, The World Bank
this exercise due to its unclear regulatory Group, 2011.
framework.
24