Three game-changers that make ASEAN a compelling proposition for Brisbane businesses
By Nathan Harvey, founder at Game Plan Asia
Dynamic, exciting and full of opportunity. Three expressions that spring to mind when I think of Southeast Asia. And here’s one more … the bedrock of Australia’s future success and prosperity.
Southeast Asia’s 640 million people are young, upwardly mobile and hungry for growth. During the next 20 years, ASEAN (Association of Southeast Asian Nations) will be dominated by three epic growth stories that will enable the region to keep pace with its people’s appetite for growth and development.
These stories are not constrained by industry, country, culture or consumer group. Each provides multiple layers of opportunity for players in the upstream and downstream supply chains to grow and prosper in ASEAN, and all of them can bear fruit for Brisbane businesses.
Story 1: Food, glorious food
Last year my wife and I spent four months in Bali with our two young children. During our stay countless examples emerged of where Australia, and Southeast Queensland, can contribute to Indonesia’s growth.
One seemingly trivial transaction highlighted to me the incredible strength of “Brand Australia”. We were staying on the outskirts of Kerobokan and a few hundred metres from our villa were a few small warungs (shops) where we would do our weekly shopping.
One day I noticed the local butcher started stocking premium beef. In broken Bahasa I won’t attempt to replicate here, I asked the difference between the usual beef and his new premium beef.
The premium beef, he told me, was Australian while his usual supply was from Java. Over time I tried both. And sure enough, the premium beef was deserving of its premium price tag. The local community agreed.
As time passed, the “premium” range extended to other cuts of meat as Brand Australia took hold. This is a microcosmic example of the perception and reality, not only in Bali or Indonesia, but right throughout the region of Australia’s epic brand reputation for quality food and ingredients. Living for five years in Singapore, I had witnessed this time and again as artisan products, craft beer and high-end wines encroached further on to the shelves of supermarkets and speciality suppliers across the Island.
The paddock-to-plate food story in ASEAN is massive. It is a story that touches people’s lives in every corner of the region from production, logistics, distribution, marketing and end consumption. Brisbane’s food production story is also immense, and it’s time both sat down at the table in a much bigger way.
Right now in rural Myanmar a farmer is tending his rice paddy as he has done all his life. This year he needs to produce more, with less. He needs to produce 8% more, in fact, and will need to do so year upon year for the next 10 years. That is the predicted rate of growth for Myanmar, the world’s fastest growing economy. Year upon year he will need to grow production while the land around him is lost to a growing and rapidly urbanising population.
Crop production technologies to improve efficiency throughout the Mekong economies of ASEAN are critical to enable the region to keep pace with its rapid growth. And I believe Australia has the solutions to this very complex problem. After all, agriculture is in our DNA.
There are enormous challenges and risks, of course. The technologies and solutions will need to be adapted to be relevant to the consumers they serve in developing and remote communities. Large-scale farm management irrigation systems designed for big Australian producers, for example, are unlikely to work for a rural farmer.
The applications will need also need to be priced in an accessible way to the markets they will benefit. Consider this great example of Designing for People Living on a Dollar a Day. As with everything in the region, volume is key and if the design is good and the price is right, demand in numbers will make the exercise worthy of completing.
Story 2: Education rules
In Brisbane’s purpose-built student accommodation (PBSA) market, 1500 beds came online in 2016 and a further 5000 beds are forecast for completion between now and 2020.
The growing supply of PBSA is not generating a market oversaturation, rather addressing growing demand primarily from an increase in the international student market.
In February 2017, there were 486,289 international student enrolments in Australia, an increase of 14% on the same time last year, and about 75,000 were in Brisbane. ASEAN students were Australia’s second largest student market, behind China. This holds true both nationally and for Queensland.
More exciting is the number of commencements or new students. ASEAN commencements have increased 83% between 2014 and now. This is clearly a market worth taking care of, learning more about and catering to as the education story continues.
Forget the headline statistics for a moment though. There is something far more exciting about getting to know and understand this market outside of the core education environment.
Firstly, Southeast Asia has among the highest social network usage in the world. Here is an opportunity to open a dialogue and build an audience with young and upwardly mobile representatives from the biggest social media-using countries in the world.
Secondly, and this is the best bit, you can establish your audience and your brand awareness here, in Australia, without spending a dollar on building a physical presence or online platform abroad.
Imagine, year upon year, thousands of graduating students returning home to Southeast Asia with Brisbane etched in their mind and at the forefront of their thoughts is your design, your service, your product. And you have built it all here, in Australia, without stepping on a plane, simply by harnessing the power of inbound education.
I am often asked about inbound opportunities to access Southeast Asia and there are many – tourism, professional services, property investment, to name a few. But the inbound education segment is the most important one to tap. Here is a ready audience of young, upwardly mobile consumers that, engaged in the right way, will act as the messengers and advocates of brand Brisbane to 640 million people in Southeast Asia.
Done well, this market will tackle 70%-80% of your legwork in growing into Southeast Asia.
I simply can’t imagine a more opportunistic market-entry strategy.
Story 3: The infrastructure gap
The Asian Development Bank recently released the “Meeting Asia’s Infrastructure Needs” report, which concluded that developing Asia will require investment of $1.7 trillion a year in infrastructure until 2030 to maintain its growth momentum, tackle poverty and respond to climate change.
Of this, ASEAN economies will require annual investment of $210 billion per annum to maintain growth. To put that in context, the annual investment demand of ASEAN is equivalent to building another Queensland-size economy every year for the next 15 years. To add further perspective, the gap between current investment levels and the forecast requirements in ASEAN is $US92 billion per annum – a 44% gap between what is done now and what needs to be done.
Penning a chapter in ASEAN’s infrastructure story over the next 20 years will be akin to getting in on the internet at the dawn of the 1990s or riding the mining boom throughout the 2000s.
Just like inbound education, the infrastructure story is one riddled with twists and turns and opportunities for both upstream and downstream players. Initial funding of large-scale projects will likely come in the form of government spending and large private equity injections.
However, the size and scale of these projects need not deter smaller businesses from joining the story. Private sector contributions will include planning, developing, building, operating and maintaining the infrastructure and the projects themselves. Large-scale infrastructure such as roads and rail links will of course lead to smaller projects as a result of urbanisation.
It is worth repeating - the annual investment demand of ASEAN is equivalent to building another Queensland-size economy every year for the next 15 years.
We need to go north for ASEAN to look south
Around the globe there are plenty of entrepreneurs and established businesses with intelligent solutions to ASEAN’s challenges. These are Australia’s opportunities to lose - if we do not aggressively go north with our expertise, ASEAN will not necessarily look south for solutions.
Geographic proximity and pre-existing “Brand Australia” perceptions alone will not guarantee success. To capitalise on the opportunities in ASEAN investment is required. This includes financial investment, but equally as important it requires relationship building and time.
It would be remiss to blindly discuss the opportunities without acknowledging and addressing the inherent risks.
Players entering ASEAN need to equip themselves with knowledge and awareness of the Southeast Asian markets. This applies in equal measure to the commercial realities of doing business as it does to cultural etiquette.
This is tricky and easier said than done. Southeast Asia is a complex market place and there is no one single playbook for success.
Potential entrants also need to be prepared to play a long game. Fleeting set and forget semi-annual visits to the region to check on progress will not yield results. Relationships rule all and require time on ground and a genuine empathy for the communities in which you are doing business.
As all good business leaders and investors understand, value exists where downside risks can be managed while the upside can be exploited.
With careful planning, due diligence and investment, the markets of ASEAN tick this box. You should too.
More from the May edition of The Brisbane Report