For many years, trade delegations from Canada have made their way to Beijing, Shanghai and Mumbai – by-passing the smaller markets that make up Southeast Asia (SEA). This is despite Canadian exports and investments in the region having quietly continued to reach impressive levels. Take, for example, that 2011 Canadian exports here totalled some $4 billion – double that of our export trade with India.
There are many good reasons why now is the time to turn the spotlight on Southeast Asia – as a market itself, as a compelling investment destination and as a gateway to Asia.
Situated as it is between India and China, SEA can be described as being “straight down the middle” – similar to a solid and safe golf shot. As such, Canadian “players” would be well advised to consider taking on SEA first. Home to 600 million people, SEA comprises many open markets where growth and development will exceed global averages for the next several years.
For a long time, though, SEA was viewed as separate economies, rather than a distinct region. That is changing. The 10 markets comprising the Association of Southeast Asian Nations (ASEAN) are actively pursuing regional economic integration with the establishment of the ASEAN Economic Community (AEC) in 2015. The AEC will transform SEA into a region with free movement of goods, services and investment, skilled labour and freer flow of capital.
There is a lot of work to be done, but as the AEC unfolds, the region is becoming one of the most attractive in the world in which to do business.
- 10 countries and 600 million people
- Among the world’s most open markets
- $4 billion in imports from Canada
- Forming ASEAN Economic Community (2015)
While AEC will help define ASEAN as a single market, I would propose that, when viewed from Canada, the compelling thing about ASEAN is actually its diversity. No other region has economies ranging from the highly advanced city-state of Singapore to newly emerging markets such as Cambodia and Burma.
This diversity enables Canadian companies, large or small, to choose an entry point that makes the most sense for them. This could be establishing a base in Singapore, consistently ranked as the easiest place in the world to set up a business; or choosing from the comparative advantages of Thailand or Malaysia as a manufacturing and supply chain hub.
Of course, identifying the best market entry point is never easy. Southeast Asia is a long way from Canada so you need to choose your partners carefully. And SEA buyers will have to be assured that you can consistently deliver and provide after-sales service to bridge the distance. So an effective on-the-ground presence is crucial.
EDC established a permanent representation in Southeast Asia in 2004. Since that time, we have worked hard to build solid relationships across the region – with financial institutions that can assist Canadian companies in each market, and with many leading regional and multinational corporations investing in sectors that match Canadian capabilities, such as cleantech, ICT, oil and gas, aerospace and infrastructure.
We work closely with the Canadian trade commissioners across the region to link our companies to new opportunities – facilitating and creating trade through sector-specific trade missions and matchmaking sessions. And we work with Canadian companies when they decide to invest in the region – providing market advice, introducing them to financial partners, and helping them understand and manage the risks. We also assist them, once established here, to grow their business across Asia, with the help of our EDC representatives in China and India.
Over the next few years a more integrated ASEAN economic community will serve to enhance the already compelling Southeast Asian story. Aim for it – straight down the middle. When you do, our SEA team including Rajesh Sharma and Patricia Chong in Singapore and Chia Wan Liew in Ottawa will be pleased to assist.
Robert Simmons, EDC Chief Representative, Southeast Asia, based in Singapore. After 9 years in SEA, Simmons will return to Canada this spring as Chief Representative – Asia, based in Vancouver.