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Southeast Asia beckons with promises of profits
Southeast Asia is emerging as a major source of growth for Canadian companies with operations in Asia and the vast majority project that their profitability will continue to grow in the next two years. This is one of the key findings from a survey released by the Asia Pacific Foundation of
The Survey of Canadian Businesses in ASEAN, 2013 is the first of its kind in measuring the current operations and outlook of Canadian businesses operating in the ASEAN region.
The survey found that 63% of Canadian businesses said that they had achieved profitability within three years of beginning their ASEAN (Association of Southeast Asian Nations) operations. The majority (63%) of companies also said that their investment in ASEAN had increased in the past two years.
“The vast majority of Canadian businesses in the region are profitable, and most project that profitability from their ASEAN operations will increase in the next two years,” said Yuen Pau Woo, President and CEO of the Asia Pacific Foundation of Canada.
“Despite ongoing concerns about growth prospects for emerging markets, Canadian companies on the ground expect continued success with their Southeast Asian operations.”
Looking ahead, 81% of businesses were optimistic that their investment opportunities in the region would be positive. 81% also believed that their company’s investment in ASEAN would increase within the next five years.
The majority of businesses active in ASEAN are small- or medium-sized enterprises (SMEs), with 45% reporting a turnover of less than $1 million in 2012 and 74% employing less than 50 workers in ASEAN. Nearly one-third of Canadian companies active in the region are in the professional services industry.
The next-most common industries are manufacturing (16%) and oil and natural gas (15%).
The top three countries where Canadian companies are most active include: Singapore (60%), Indonesia (58%), and Malaysia (53%). Interestingly, although only 14% of Canadian businesses currently in ASEAN are active in Myanmar, 35% of business surveyed that were interested in becoming active in the region in the future cited Myanmar as a country of interest.
According to the respondents, the main barriers to doing business in ASEAN were corruption (67%), inconsistent laws and regulations (60%), and risk of intellectual property infringement (59%).
The survey was conducted by the Asia Pacific Foundation of Canada in September 2013. It was developed in partnership with the Canada-ASEAN Business Council and sponsored by the United Overseas Development.
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