ASEAN, a trade block that is gaining economic traction this year while other regions are cooling down, could prove an even brighter spot next year and beyond. The uptrend presents great business opportunities for Taiwanese firms, and a considerable number have been building their presence in the region and plan to expand. Amanda Murphy, HSBC cohead of commercial banking for Asia Pacific, shared her firsthand observations and insight on business growth potential in ASEAN markets, opportunities for Taiwanese companies and factors that are reshaping the banking industry in an exclusive interview with ‘Taipei Times’ staff reporter Crystal Hsu in Taipei on Wednesday last week
Taipei Times: What will the global economic scenes look like next year? Will global inflation, monetary tightening and geopolitical tensions remain top challenges for firms?
Amanda Murphy: Our customers have expressed concerns over challenges with interest rates, inflation and the ramifications of high inflation levels through the supply chain. They are also facing challenges with attracting skills in some sectors. As their businesses grow, they want to make sure they have supply of skills. Further, customers want to protect their companies against currency volatility seen across the world.
However, they are also seeing opportunities. Based on the recent survey Global Connections we conducted with over 3,500 companies, the consensus is that they are seeking to expand business and are looking at new markets to enter into. Overall, they are optimistic about Southeast Asia.
Photo courtesy of HSBC
TT: With a GDP of US$3.3 trillion and a population of 673 million, ASEAN is gaining economic importance globally. What business opportunities are there for Taiwanese firms?
Murphy: Assorted predictions show ASEAN would emerge as the world’s third-largest economic trading bloc that presents a multitude of business opportunities. Taiwanese firms have been moving south and entering into new markets, especially in India, Indonesia, Vietnam and Thailand. Some sectors are prominent such as those involved in the making of wind farms, solar panels, electric vehicles and other things. Some firms are eying expansion through joint ventures to deliver their services into new countries.
TT: What risks and obstacles Taiwanese firms will face when seeking entry into new markets?
Murphy: They have to understand different trading rules. Every market has a different legal system. There are a number of trade agreements that are beneficial to foreign companies, help them gain access to new markets and make an even playing field. Businesses like certainty and stability. The more the market can make its rules clear and understandable for businesses, the more attractive the country will become a destination of foreign investment.
TT: How can HSBC help and stand out against competing banks in the region?
Murphy: We have been in this region for more than 160 years and in Taiwan for nearly 40 years. We have presence in all of the largest economies in Southeast and South Asia.
Our international footprint with local capabilities is well placed to support companies who are creating the businesses of tomorrow. HSBC will provide its corporate clients with differentiated banking services covering transaction banking, capital financing, structured trade and hedging solutions whether globally, regionally and locally.
In particular, HSBC has Mandarin-speaking relationship managers around the world to make communication with Taiwanese wholesale customers more efficient. Our customers appreciate that with quite positive feedback.
TT: Is ASEAN the bright business spot in 2024 and beyond?
Murphy: It’s clear that Southeast Asia — more specifically ASEAN — has become an important investment destination for companies that are looking to grow their international footprint.
Based on the Global Connections survey, the polled companies are looking to grow their business there by over 23 percent next year with four of nine companies expecting expansion of more than 30 percent.
More than 50 percent have the intention of inorganic growth in ASEAN by acquiring a company or through joint ventures, and 90 percent plan to expand in at least one ASEAN market. The data lend support to moving south.
TT: Which sectors will be the driving force and what markets are Taiwanese firms eyeing?
Murphy: Companies in healthcare, climatech and new economy are expecting fast growth. We see that Taiwanese electronics companies are targeting India and Vietnam. Automotive companies are going to Thailand. Electric vehicles are investing in Thailand and Indonesia.
As the economy in ASEAN takes off, the middle class is growing and so is their purchasing power. In Indonesia, for instance, people are buying motorcycles, their main transport vehicle, which we see great opportunities from relevant industry players from Taiwan and also other markets.
Overall, Taiwan can play an important role in the growth of intra-Asia trade, supply chain diversification and the region’s growing consumer spending power.
TT: Are there inbound opportunities for Taiwanese firms?
Murphy: We recognize strong growth momentum in Taiwan’s semiconductor, technology, electronics, consumer goods, textile and retail companies. We also see opportunities in new economy sectors including artificial intelligence, electric vehicle, 5G, battery storage as well as satellite. These industries have demonstrated strong appetite for international expansion, which requires an international bank to help them expand into the local market.
TT: The world is changing and so is the banking industry. How do you see the commercial banking market is evolving in the next five years?
Murphy: The [COVID-19] pandemic has speeded up digitization at a pace unseen before. It has changed the way people see and do business. Consumers today want instant gratification. They would go online, find what they want, and get it the next day. The infrastructure supporting the systems needs to be changed. Southeast Asia has become home to the world’s largest real-time payment systems. The trend has opened a lot of business opportunities.
Companies need to find a balance between their physical presence and digital reach. The way companies manage supply chains also has changed and they seek to maximize their use of working capital. Firms that didn’t have sufficient liquidity during the pandemic struggled and some went out of business.
The ability to manage cash flows became even more important for businesses. In the meantime, firms should adopt the digit-first mentality and seek to take care of things through digital means.
The other big change is sustainability. It is a growing priority for firms globally. A sizable number of customers indicate they will review their suppliers based on their sustainability credentials. HSBC has committed US$1 billion to finance climate technologies including carbon dioxide removal globally, helping startups grow and scale their clean solutions.
To achieve net zero in the global economy, everybody has a role to play, whether individual businesses, governments, financial sectors and the society as a whole. HSBC is passionate about the subject.
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