ASEAN celebrated its 50th anniversary with a grand parade in the Philippines which represented the different cultures of its 10-member states on August 8, 2017. No one expected ASEAN to survive past 10 years, let alone 50, when there was intense conflict between its founding members in 1967.
Singapore had just separated from Malaysia and was in a confrontation with Indonesia. The Philippines was claiming Sabah from Malaysia. There’s border unrest between Malaysia and Thailand, and not to mention the economic troubles as recounted by NUS’ professor Kishore Mahbubani.
ASEAN miracle shows the importance of sticking to your convictions
Looking at the miracle of ASEAN, we can understand how expectations of the future can be wrong which means that there is money to be made if one can make the right judgment call. For instance, if you had invested into ASEAN, be it property or business in 1967, you would be sitting on a pile of cash today. Of course, that would take both guts and conviction to invest in a seemingly hopeless region.
Source: Facebook of The Inquirer
If 50 years is too long to underscore the point of how public expectations can be wrong, we can simply look back at the last 5 years. In May 2012, Facebook’s price dropped from $42 to $31 in a week and there were doubts about its revenue and profitability. Even in February 2013, Forbes ran an article that declared Facebook was overvalued at $27. Today, Facebook is priced at $171 and this week, analysts expect it to hit $200 in 12 months on strong growth.
Source: Yahoo Finance
What happened to ASEAN in 50 years was condensed into Facebook in 5 years. For most of us, Facebook has more impact in our lives directly than ASEAN but it underscored an important point in business. There will always be detractors but it is the business owner who has to clarify misunderstandings and make a stand for his business. Whether you are sinking $50,000 into your business or Facebook, you will have to endure storms and stand by your convictions.
More opportunities outside of Singapore
For the first 40 years, Singapore had grown faster than the rest of ASEAN and today, its growth has moderated while the rest of ASEAN is expected to speed up their growth. Collectively, ASEAN along with China, Japan, and Korea are expected to grow by 5.2% this year while Singapore is expected to grow by 2%.
The fastest growing economies in the region (>6% growth) includes Cambodia, China, the Philippines, and Vietnam. Each of these countries have their own challenges, but are all within a 5-hour flight. This means that you can fly there within the same day to deal with urgent matters while you clock your frequent flyer miles.
In other words, Singapore will be the perfect headquarters for you to manage your regional business out of. Besides the GDP view, we can also look at the importance of going out of Singapore from the limited fiscal expansion position of matured economies like Singapore.
China was able to ramp up infrastructure projects in the wake of the 2008 GFC because it had the fiscal space to take on more debt. It sheltered the rest of Asia from the worst effect of the GFC. The matured economies of Singapore, Hong Kong, and Japan had exhausted this option for massive infrastructure projects.
However, the governments of the Philippines and Indonesia have the option of ramping up their fiscal spending if they think that it is necessary. Even without government action, the sheer aspiration of its large population of people to improve their lives would create an uplifting economic effect.
Stepping out of Singapore
Singapore is a safe environment where the laws are clear and people are familiar to us. Given the uncertainty, it is understandable that companies don’t want to step out of the comfort zone. Of course, stepping out of the comfort zone doesn’t have to be difficult.
Governmental support normally comes from IE Singapore where you can tap on their Global Company Partnership Grant (GCP) and Market Readiness Assistance Grant (MRA). GCP covers the cost of capability building and human resource building with schemes such as the Overseas Market Attachment where you can send your staff overseas with 70% their basic salary paid for.
If you look at the private sector, we have 3E Accounting and its international network of accounting offices to explain the rules of doing business with 79 offices in 50 countries. As all its offices are under the same network, they share the same mission, values, and philosophy. It is like stepping into Starbucks in another country. While the language, law, and local customs are different, they have the same high quality and reliability in their company setup and accounting work. That removes some of the risk of venturing overseas.
If all else fails, you can also tap on the new trend of business crowdfunding where decisions are made under 10 minutes for small loans of $150,000. Otherwise, you can also look at the Spring Singapore’s Venture Loan for up to $5 million, SME Working Capital Loan of $300,000, or the SME Micro Loan of $100,000. The point is that money should never be a limiting factor.
Get organized and stand steady in storms
If we can learn anything from the 50 years of ASEAN existence, it would be that businesses must get organized and stand steady in storms. Relative to the safe harbour of Singapore, anything outside of Singapore is stormy. This storm is not unlike the conflicts of 1967 but 5 nations stood steady and organized themselves into a regional grouping; settled their differences and discussed about their economic strategy.
These 2 qualities are critical to the success of ASEAN even as other groupings and countries failed. Singaporean businesses can apply these 2 qualities when they step out into the storm of the larger ASEAN community.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Ong Kai Kiat is the founder of TextInAsia, a Singapore-based independent source of insights in the fields of finance and technology. He had years of experience in contributing articles to various reputable websites. TipRanks had ranked him internationally as a four-star blogger for his work in finance.