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Businesses looking to grow would do well to look toward the major markets in Southeast Asia.
A BCG report estimated the region to be home to approximately 245 million middle-income consumers and 85 million upper-middle-income consumers in 2024. This figure is expected to rise to over 415 million by 2030, more than the entire population of the United States.
Across the 10 Association of Southeast Asian Nations (ASEAN) member nations, consumption is already a significant driver of economic activity. Final consumption expenditure accounts for over 90 percent of gross domestic product (GDP) in the Philippines, over 70 percent in Indonesia, Malaysia and Thailand and over 60 percent in Vietnam.
In addition, local spending power growth is supported by long-term structural trends. The ASEAN region boasts 213 million people in the 15 to 34 age bracket, which is forecast to keep growing until 2028.
At the same time, regional integration allows for easier movement of people and money between borders, accounting for rising spending on tourism, business services and e-commerce. Intra-ASEAN economies accounted for 42.4 percent of visitor arrivals in 2023, while intra-ASEAN trade accounted for 22.1 percent of all exports in the same year.
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With an increasingly digital population, ASEAN’s consumer base are keen users of e-commerce platforms and mobile apps, which act as a bridge between local consumers and regional and global brands.
Across the region, 75.9 percent of the population have an internet subscription, with 128 cell phones for every 100 individuals.
According to the E-Conomy SEA 2023 report by Google, Temasek and Bain, the digital economy in the six largest economies of the region, namely Indonesia, Thailand, Singapore, Vietnam, Malaysia and the Philippines, was worth an estimated US$218 billion in gross merchandise value (GMV) in 2023, and is on track to reach $600 billion by 2030.
While the scale of the opportunity and progress of digitalization are common factors across ASEAN, the region is far from homogenous.
In Thailand, almost half of grocery shopping takes place in modern convenience stores and supermarkets, contrasting with a mere 12 percent in Vietnam where traditional mom-and-pop stores still dominate. Meanwhile, Indonesia boasts the most TikTok users globally at 157.6 million, surpassing the US’ 120.5 million.
Payment channels also differ markedly across the region, with digital wallets continuing to gain acceptance as real-time payment networks extend across borders. The WorldPay Global Payments Report 2024 found that in offline retail, cash remains the preferred form of payment in five of the six biggest ASEAN markets, with the exception of Singapore, where credit cards are now the most common form of payment.
“Consumer-facing businesses need to tailor their offerings to local preferences in purchasing habits, as well as products and services,” said HSBC [Head Of Global Payments Solutions] [Anne Suhandojo].We’re seeing more businesses choose a banking partner that can support a range of payment channels across the ASEAN region.”
Businesses operating across borders in ASEAN also need to overcome a number of operational obstacles, particularly in logistics. An expansive network of distribution partners and the ability to respond quickly to consumer demand in multiple locations is vital, as is designing consumer products to meet local regulations, many of which differ between individual markets.
The potential of ASEAN’s consumer markets has also created a hyper-competitive environment, with local and global brands battling for market share.
On a macro level, a recent bout of high inflation and elevated interest rates has made consumers more price sensitive and weighed on demand. To this end, policymakers are striving to keep consumers spending, as in the case of the Thai government’s cash hand-out program that was rolled out in September 2024 to boost consumption in local areas.
Banking on growth
One of the key components in improving consumer reach in the ASEAN market is an experienced banking partner, which can ease the pain of managing payments and collections across multiple channels and in different currencies, thus freeing up businesses to focus on their growth agenda.
With over 130 years on the ground in the six biggest ASEAN markets, HSBC serves 2.5 million retail clients and 30,000 businesses, capturing over 93 percent of ASEAN GDP and international trade. The bank’s extensive network and deep understanding of the region’s local markets allows it to support businesses on their cross-border transactions.
For consumer-facing businesses, HSBC Omni Collect offers a one-stop solution supporting collections from in-store and e-commerce sales across multiple payment channels, enabling businesses to offer more payment options and monitor transactions online to identify new sales trends. “Manual invoice management often makes it difficult to match and identify transactions, thus disrupting operational smoothness. However, after implementing Omni Collect, we felt an integrated end-to-end solution. This solution streamlines our invoicing process, thereby accelerating sales and product delivery. Now we can automatically reconcile invoices to optimize cash flow.” Said Angie Natasya, Operational Director of PT Fitline Nutrition and Cosmetics, which partners with HSBC to simplify the payment process and improve operational efficiency.
HSBC also contributes to the growth of the consumer sector through support for fintech businesses that allow more retailers to offer buy-now-pay-later (BNPL) services and digital wallets, as providing consumers with more options at the point of sale can be a powerful driver of revenues.
HSBC extended a $100 million debt facility to Southeast Asian fintech pioneer Atome Financial to support its digital-first consumer financing proposition, as well as expanding its support for new economy businesses in Southeast Asia with the launch of a $1 billion ASEAN Growth Fund in 2024.
HSBC’s understanding of ASEAN markets also allows it to support growing businesses on their cross-border financing needs.
As more markets move away from cash, consumer-facing businesses will need to keep up with their customers’ preferences. With the number of consumers set to rise steeply in the years ahead, there has never been a more important time to capture that growth.
Source: HSBC
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