Southeast Asia is one of the bright spots amidst a gloomy global economic outlook. While other regions are expecting economic recession, the OECD projects the region's economy to grow around 5.2%, with individual nations growing between 3% and 6.9%.
Global professional services firm Jahani and Associates estimates that due to its vibrant economic prospects, Southeast Asia's logistics and finance sectors will grow significantly in the coming years, benefiting from several geopolitical changes in Asia and the aftermath of the COVID-19 pandemic.
This is exemplified by a recent major deal advised by professional services firm bank Jahani and Associates, where Dubai-based tech-enabled international logistics company, Time Express partnered with Indonesian conglomerate Sintesa Group to operate business-to-business logistics services throughout Indonesia. The COVID-19 pandemic has spurred Indonesia's logistics industry to grow by over 400%, with courier services and e-commerce as the most popular businesses in the industry.
E-commerce is fueling the demand for logistics services in the region, especially in the last-mile sector. Trust in e-commerce platforms has grown in the past few years, and more people are buying a wider variety of goods across different channels. The region's supply chains are evolving in order to meet surging demand, and long-standing logistics companies are facing increased competition from new entrants, many of which are harnessing innovative technologies to close the gap with their more-established peers. A growing logistics sector also has a multiplicative effect for the rest of the economy, as a resilient supply chain is one of the hallmarks of economic growth.
According to Jahani and Associates, Indonesia is fertile ground for growth in logistics and finance. It is the largest economy in Southeast Asia, ranking 16th worldwide, and a population of more than 270 million. It also has a stable government and currency, with low risk for investors. Other Southeast Asian nations, such as Malaysia, the Philippines, Thailand, and Vietnam are in a similar position, with emerging economies, relatively young working-age sizable populations, and growing middle classes.
Singapore is Southeast Asia's most prosperous country and the region's business and financial hub. The Lion City is now benefiting from an exodus of companies from Hong Kong, which is Asia's traditional financial center. Numerous multinational companies have established their Asian regional headquarters in Hong Kong, but it has seen a significant amount of business and talent leave since 2020 when Beijing introduced a national security law that cracked down on social and political freedoms. Businesses have noted the Chinese Communist Party's enlarged control over Hong Kong and its business sector, as well as the election of Chinese President Xi Jinping to an unprecedented third term.
The city's stringent restrictions in response to the COVID-19 pandemic have also stifled operations of many businesses, and they remain hesitant even after the quarantine requirement was lifted in 2022. These political developments have encouraged companies to look elsewhere for a more business-friendly environment.
Jahani and Associates confirm Singapore will continue to reap these benefits in the coming years, as its government is making sure that more businesses will flock to its shores. The city-state continues to build its reputation as a global asset management center, with total assets under management of around $4 trillion and more than 1,100 licensed fund management companies, according to data from PwC. Singapore introduced the Variable Capital Company (VCC) corporate structure in 2020, providing a more flexible strategy for traditional and alternative funds. These VCCs are lightly taxed and are protected by Singapore's stable and well-regulated financial system, which is one of the most attractive environments for multinational companies today.
Southeast Asia holds a huge amount of potential, with a relatively stable political, economic, and social situation compared to other emerging regions in the world. Jahani and Associates continues to provide expert advice for firms that want to expand their business operations into this attractive market, drawing on its wide network and relevant expertise.
