Date posted: 27/04/2018 4 min read

The new ASEAN common market

ASEAN is working to become a common market, which presents new opportunities for Australasian businesses in sectors such as food, financial services and fintech.

In Brief

  • About 90% of Australian businesses operating in ASEAN plan to increase investment in the region in the next five years, according to a new 2018 survey.
  • E-commerce is projected to grow by 14% in ASEAN over the next five years.
  • By 2030, ASEAN will have the fourth-largest economy in the world – currently it ranks seventh.

By Donna Webster

Political leaders, captains of industry, small and medium businesses, and entrepreneurs from across Southeast Asia and Australia all came together in Sydney in March this year for the inaugural ASEAN-Australia Special Summit. 

It was the first time Australia had hosted ASEAN’s leaders in Australia. Setting a new high-water mark in the relationship, the forum brought the ‘once in a generation’ opportunity that this vibrant region offers more sharply into focus. In the lead-up to the Special Summit, we engaged more than 2500 organisations and individuals nationwide to dive into what the tremendous changes underway in Southeast Asia mean for Australian businesses. 

Domestic businesses are eager to be part of ASEAN’s growth story and its move to create a common market. But they also want more understanding of key changes shaping the business landscape, such as regional integration, evolving consumer trends and the fast-moving digital economy.


ASEAN is one of the most diverse, dynamic and complex regions in the world. It is currently the seventh-largest economy in the world and will be the fourth-biggest by 2030. Half of the world's middle class will live within a six-hour flight from Bangkok within the next decade. Collectively, ASEAN has the world’s third-largest population and an estimated 90 million more people will move to urban areas by 2030. 

Australia’s $93 billion two-way trade with ASEAN has grown by more than $25 billion in the past decade, and now exceeds trade with the United States and Japan. ASEAN accounts for 11.5% of Australia’s exports and 16.1% of imports. ASEAN was also the largest source of goods export revenue for Australia’s small-and-medium-sized exporters in 2014–15.

The regional free trade agreement (the ASEAN-Australia-New Zealand FTA) has also helped give Australian businesses a competitive edge. It has also increased the appeal of ASEAN’s large, young workforce and strategic location, which make the region an attractive production base. 

ASEAN Economic Community

ASEAN officially launched its Economic Community (the AEC) in 2015, marking an important economic and political commitment to the region’s shared and connected future in a common market. ASEAN is comprised of 10 member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam.

The AEC is still a work in progress, but it has made solid progress towards promoting the seamless movement of goods, services, capital, skilled labour and communication. According to the ASEAN Secretariat, 99% of initiatives planned for the current phase of economic integration have been achieved. Tariff barriers have been removed across the five largest member countries, as well as Brunei. An ASEAN Single Window has been implemented across Singapore, Malaysia, Indonesia and Thailand to expediate customs clearance and enable the electronic exchange of border documents.

In addition to its free-trade agreement with Australia and New Zealand (the AANZFTA), ASEAN has also signed regional FTAs with Japan, Korea and India. Progress towards the ASEAN Economic Community has varied by sector, with some sectors more integrated than others. But the impacts of the AEC are real and already far-reaching. 

The AEC has fundamental implications for Australia, Auscham ASEAN President Fraser Thompson says. “It is important to understand how economic integration will impact your business.” Each ASEAN country has distinct and complementary strengths. Singapore is renowned for its financial services sector; Thailand has built a strong manufacturing industry; Malaysia and Vietnam have established ICT hubs; and, Myanmar can provide access to expanding pools of labour. 

An example is leading biotechnology company Cochlear, which has established an ICT centre in Kuala Lumpur to tap into Malaysia’s deep pool of skills and its business-friendly climate to develop a global support service. 

Changing consumer preferences

With rising disposable incomes and increased connectivity, ASEAN’s consumers are transforming how they spend their money. The region’s considerable economic diversity means it is essential to look at country and market-specific opportunities. Major cities will remain significant drivers of demand, however, rising consumer power is likely to be most pronounced in satellite and second-tier cities. According to Austrade, several sub-regions in ASEAN will have greater consumer sales growth than entire countries.

ASEAN’s new consumers are urban and young. They increasingly desire premium, high-value products, not just stable commodities. Australia’s high-quality, safe food, dairy and agricultural industries are well placed. The University of Queensland’s Professor of Value Chains, Alice Woodhead, describes the demand for agricultural products emerging among ASEAN’s millennials as “fusion markets” as these people integrate western cuisines into traditional diets. 

“Most Australian marketing is pitched at educating Asians to eat traditional Australian foods,” Professor Woodhead says. “We are not grasping this fusion opportunity enough, or developing products that meet the demographic needs.”

Digital economy

Unprecedented digital transformation is at the forefront of ASEAN’s growth and transformation. This is being driven by rising consumer demands, cheap and accessible devices and youthful, tech-loving populations that have embraced e-commerce and social media. Boosted by local successes such as Sea (formerly Garena), Go-Jek, GrabTaxi, Lazada, Razer and Tokopedia, Southeast Asia’s start-up landscape has grown exponentially. Google estimates there are now more than 7000 digital start-ups across the region.

E-commerce in the region is projected to grow at 14% over the next five years, compared with only 4% in China. As new technologies revolutionise people’s daily lives, businesses need to seriously rethink how they engage with consumers. As Victoria’s Minister for Innovation, Philip Dalidakis, says: “With its strong start-up sector, investment from multinationals and growing economies, [ASEAN] is a launch pad from which businesses from across the world can vault into new markets.” Stone & Chalk, a Sydney and Melbourne based fintech start-up hub, is a good example. It recently partnered with Jakarta-based UnionSPACE, to enable its users to use co-working spaces across Jakarta, Manila and Kuala Lumpur.

Australia has a long track record in financial services delivery in Southeast Asia and is well-positioned globally to compete in developing innovative financial products. With the new wave of growth in fintech also comes flow-on opportunities in regtech, cyber and e-commerce more broadly. 

Business prospects in an interconnected future

Businesses are enthusiastic about ASEAN’s economic integration, growing consumer classes and digital transformation. A 2018 survey conducted by Auscham ASEAN found about 90% of Australian businesses in ASEAN plan to increase their investment in the region over the next five years. 

The Australia-ASEAN Special Summit gave added momentum for Australia and ASEAN to continue to build a prosperous and interconnected future. As we enter the next chapter of growth, it will now be up to businesses to acquire the insights and tools needed to navigate shifting landscapes and distil diverse sector and market-specific opportunities. Doing so enables Australian businesses to partner with ASEAN on its remarkable rise. 

Related: Economic prosperity rankings improve in Asia

Hong Kong, Singapore and Malaysia outperform some G20 nations on economics, but not on personal freedoms, a new paper by CA ANZ finds.

Donna Webster is the Director of Capability Development at Asialink Business, the National Centre for Asia Capability, where she assists Australian organisations to enter and grow in ASEAN and other Asian markets. Asialink Business received funding from the Australia-ASEAN Council to curate a national series of business forums that formed the basis for insights in this article.

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