SME Clinic (The Straits Times)

What opportunities does the Asean Economic Community offer to SMEs?

THE Asean Economic Community (AEC), which is due to come into force by the end of this year, aims to create a single market and production base across the region, with minimal barriers to trade and investment.

Singapore companies need to adopt a pan-South-east Asia perspective and focus on economies and sectors that will gain the most from integration to fully tap into the opportunities created by the AEC.

While economic integration will bring both challenges and opportunities, the impact of increased competition from foreign companies is likely to be minimal in Singapore, which already has an open economy.

The 10 members of Asean have varying levels of economic development and political structures.

Thailand has spent as much as 8 billion baht (S$319 million) to prepare its companies for the AEC. Indonesia is also likely to benefit, with foreign investors keen to tap into the largest population in South-east Asia.

Singapore companies can consider partnering firms in these countries to leverage their relative strengths to reap the benefits from the AEC.

Companies should also pay particular attention to sectors that tap South-east Asia’s strength as a manufacturing and consumerism hub.

Singapore companies can explore locating different parts of their operations across different economies to maximise their cost efficiency.

With the freer flow of goods within Asean, manufacturing and production costs should also be reduced due to lower costs for regionally sourced raw materials or inputs.

This will increase the competitiveness of Singapore-produced goods.

The emergence of an increasingly affluent and connected urban middle class in South-east Asia also creates opportunities for regional and global brands in the consumer sectors, and the AEC will ease the expansion of such brands across borders.

IE Singapore