Southeast Asia will continue to grow more important for American companies operating in the region. Bolstered by improved global economic prospects and easing financing constraints, American companies are expecting increased profits, expanded business opportunities, and more hiring from the region over the next two years. For many American companies, the region’s major attraction is its great, if also diminishing, supply of low-cost labor. Other positive factors include close vicinity to production facilities, a growing and integrating market, and tariff benefits from ASEAN free trade agreements—especially with China.
Cooperating with its counterparts throughout Southeast Asia, the American Chamber of Commerce in Singapore reported these findings in its recently released 2011/2012 ASEAN Business Outlook Survey. The survey, now in its tenth year, analyzes the business environment for American companies by delineating the strengths and weaknesses of doing business in Southeast Asia. This year’s survey presents the collective outlook of senior executives at member companies of American chambers of commerce in Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
According to the survey, while corruption, weak rule of law, and local protectionism are perennial concerns to doing business in Southeast Asia, the most challenging countries, such as Indonesia and Vietnam, are the focus of American business expansion in the near future. Vietnam is also the likeliest destination in Southeast Asia for American companies that plan to diversify or expand business from China.
While the survey paints a clearly positive picture of the business environment in Southeast Asia, the whole picture may turn out to be more complex. Those interested in improving the business side of US-Southeast Asia relations should be cautious in drawing overly wide inferences from this survey because its response rate was relatively low (22%) and the membership at local American chambers of commerce may not include all American businesses. As a result, the rosy picture may not have identified all the advantages and disadvantages of doing business in Southeast Asia.
Still, this recommendation should not cloud the fact that the ASEAN Business Outlook Survey is evidence that Southeast Asia is good business for American businesses.