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Hanoi (VNA) - Vietnam is among the top expansion destinations for Indian companies looking for growth opportunities in ASEAN, according to Standard Chartered Bank.
A Standard Chartered survey has revealed that Indian companies consider Vietnam, Indonesia, Malaysia and Singapore the markets that offer the best expansion opportunities.
As many as 49% of survey respondents said they are focusing on expanding their operations in Vietnam.
Accordingly, Indian firms interested in the ASEAN market are optimistic about the growth potential in the region. All of the Indian companies joining the survey are eager to expand their production in ASEAN, and more than 90% of these predicted that their revenue will grow within the next 12 months.
Access to the large and growing ASEAN consumer market, availability of abundant and skilled workforce and access to a global market enabled by a network of Free Trade Agreements are regarded as the most important drivers for expansion into the region by senior executives of the surveyed Indian companies.
The Regional Comprehensive Economic Partnership (RCEP) is also expected to attract more investments into the 10-nation bloc, Standard Chartered said.
Some 63% of respondents indicate that their company plan to pour more investment into ASEAN over the next 3-5 years.
In terms of target countries within ASEAN, 61% of survey respondents consider Indonesia the top market that offers the best expansion opportunities for their company, followed by Vietnam (49%), Malaysia and Singapore (46% each).
Despite the opportunities, Indian companies also recognized a wide range of risks and challenges within the region.
The top three identified risks are the COVID-19 pandemic or other health crises, slow revival of the economy and a drop in consumer spending. Other risks include geopolitical uncertainty and trade conflicts in other parts of the world.
Furthermore, more than 60% of Indian firms in the survey agree that adapting their business model to industry practices and conditions within ASEAN, understanding regional regulations, payment methods and infrastructure, as well as building relationships with suppliers and adapting supply chain logistics are the most significant challenges in the next 6 to 12 months.
To minimise these risks and challenges and drive resilient and rebalanced growth in ASEAN, the survey respondents consider entering new partnerships/joint ventures to increase market presence.
They have also considered investing in leadership and talent development and driving sustainability and ESG (Environment, Social and Governance) initiatives as the most important areas for their companies to focus on.
To support the growth process, Indian firms said they are seeking banking partners with strong capabilities in corporate financing and capital raising services, digital platforms for foreign exchange, and foreign exchange hedging and comprehensive multi-currency settlement services.
Gaurav Bhatnagar, Managing Director and Head of Trade and Working Capital at Standard Chartered Bank said ASEAN is one of India’s largest trading partners. With its ‘Act East’ Policy, India aims to enhance trade with its eastern neighbours, positioning the ASEAN region as an important player to deliver future growth aspirations for the nation.
Michele Wee, CEO of Standard Chartered Bank Vietnam, said Vietnam is a fast-growing economy which offers a sizeable domestic market, and a young, well-educated, tech-savvy and cost competitive labour force. Other advantages are the fact of being a member of multiple free trade agreements and being well-connected in a strategic geographical location.
Vietnam is also a key link in the global supply chain, she said, expressing her belief that Vietnam will continue to offer appealing business and investment opportunities for foreign businesses and investors.
India is now one of the top 10 trade partners of Vietnam while Vietnam is the 15th biggest partner of India and the fourth largest in ASEAN.
According to the Ministry of Industry and Trade’s Department of Asian Market, India is the most important market of Vietnam in South Asia, with two-way trade accounting for around 80% of Vietnam’s total trade with South Asian nations. From 5.5 billion USD in 2016, trade between the two countries surged to 13.2 billion USD in 2021, and is expected to hit 15 billion USD this year, a record figure./.
