UOB survey reveals 83% of SG firms keen on SE Asia expansion

UOB’s Eric Lian points out the resilience and growth of ASEAN as the major attraction for Singapore companies to expand operations.

According to the latest UOB Business Outlook study, a remarkable 83% ofbusinesses in Singapore are keen on expanding their operations overseas. The survey, conducted by UOB, sheds light on the increasing interest in international expansion among Singaporean companies, particularly in countries such as Indonesia, China, and Vietnam.

Eric Lian, head of Group Commercial Banking at UOB, commented on the findings. “We have observed a surge in interest among businesses in venturing abroad, especially in countries like Indonesia, China, and Vietnam. These companies are eyeing markets such as Singapore, Thailand, and Malaysia, with China also being a prominent destination. The recovery of regional and global activities over the past two years has likely fueled this desire for expansion,” he said.

Lian further elaborated on the reasons behind the growing interest in overseas markets, emphasising the potential for growth in the ASEAN region.

“ASEAN is projected to grow at a rate of 4.2% this year, surpassing the forecasted global growth slowdown. The region’s large domestic market, supportive monetary policies, favorable fiscal position, and the recovery of the tourism, travel, and service industries are key drivers attracting businesses,” he said.

He added that the disruption in global supply chains due to COVID-19 and the Sino-US trade war has prompted companies to adopt a “China plus one” strategy by establishing manufacturing plants in markets of Southeast Asia.

Recognising the challenges faced by SMEs when expanding overseas, Lian highlighted UOB’s two-pronged approach to assist them in their overseas expansion endeavors.

“Firstly, our Foreign Direct Investment (FDI) and advisory unit provides companies coming to ASEAN with a single point of access, offering a comprehensive range of services beyond banking, such as company services, legal support, and office accommodation,” Lian said.

“Secondly, we adopt a global account relationship management strategy, with a group relationship manager leading coordination within UOB to cater to clients' banking needs across multiple markets. This ensures seamless operations for companies with facilities in different countries,” he said.

The UOB report also identified Malaysia, Indonesia, and Thailand as the top destinations for Singapore-based firms looking to expand internationally.

Lian pointed out that within the Association of Southeast Asian Nations (ASEAN), there is a 650 million population composed of a thriving middle class that presents unique economic opportunities.

“The region’s resilience during times of turbulence, uncertainty, and post-COVID dynamics makes it an attractive and competitive environment in terms of costs, labor force, and infrastructure,” he stressed.

The study further highlighted that firms in the industrials and oil and gas sectors expressed the highest interest in expanding overseas. Lian emphasised the potential growth in these sectors within ASEAN, driven by factors such as energy demands and robust domestic consumption.

Regarding government support for business expansion plans, Lian maintained that UOB has kept partnerships with government agencies and industry stakeholders across the region.

He cited various government schemes in Singapore, including the Enterprise Financing Scheme (EFS) and M&A loans, which provide financial assistance and support for companies aiming to expand internationally.

At this juncture, Lian expressed UOB’s commitment to being a trusted partner for businesses venturing into ASEAN markets.

“We believe that businesses thrive on connections, and UOB aims to bridge the gap for SMEs, providing them with the right partners, business insights, and solutions. Our relentless focus on supporting SMEs has led us to be recognised as the Best SME Bank in ASEAN for the seventh consecutive year,” he said.