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The Association of Southeast Asian Nations (ASEAN) offers plenty of business opportunities for companies from the Netherlands. Here’s what you need to know about this growing region and how it can help your company establish a new foothold in the global market.
What makes Southeast Asia a good place for companies based in the Netherlands?
Solid economic agreements and market developments have shifted Southeast Asia’s position into one prime for growth. Companies based in the Netherlands should take advantage of the many offerings provided by the 10 ASEAN member countries, which are:
- Brunei
- Indonesia
- Malaysia
- Laos
- The Philippines
- Myanmar
- Cambodia
- Vietnam
- Thailand
- Singapore
This group of countries has an array of industries, trade relations, markets, and innovation that startups from the Netherlands crave when choosing locations for expansion.
1. Key industries
ASEAN members have several industries that support the region’s growing population. These sectors are booming and ripe for businesses based in the Netherlands to tap into. Some of the most important industries in ASEAN include agriculture, water, energy, and transportation.
The agricultural sector accounts for a major part of many of the region’s gross domestic products (GDPs). Rice, fish, palm oil, livestock, coffee, cocoa, and maize are top commodities. Population growth and climate change have sparked the need for innovation in agriculture – companies that can provide it will likely find ample opportunities in this region.
Water management is also key in ASEAN. Reducing flooding impacts, improving water-based transportation, and ensuring freshwater delivery to drought-stricken areas are some of the biggest challenges for ASEAN countries. Companies from the Netherlands that have experience in these areas will fit well into the local economy.
To provide electricity, businesses need to tap into existing fossil fuel and renewable resources throughout the region. Local waterways, wind, and ample sunlight in many locations present opportunities for clean, renewable energy companies.
Lastly, ASEAN nations are aware of the importance of growing and improving their infrastructures. To facilitate this need, businesses in the region may seek funding through the Asian Infrastructure Investment Bank (AIIB).
2. Current trade relations
Trade relations between ASEAN members and other countries are strong. In November 2020, ASEAN connected with five other major trade partners to create the Regional Comprehensive Economic Partnership (RCEP). The RCEP is the world’s top free trade pact, accounting for 30 percent of global GDP. Participants include:
- China
- The Republic of Korea
- Japan
- New Zealand
- Australia
- ASEAN
Companies that do business in ASEAN have access to this valuable trade network, creating even more growth opportunities.
3. Market size
ASEAN has the fifth-largest economy in the world. With its current growth trajectory, the region is on course to becoming the largest market in the world by 2030. While the Covid-19 pandemic severely impacted many countries, it hasn’t had as much of an effect on ASEAN countries. For instance, Vietnam’s GDP rose 2.3 percent in 2020.
Strong commercial ties and a commitment to keep open markets for essential goods helped the region navigate the pandemic. In April 2020, the region adopted the Hanoi Plan of Action on Strengthening ASEAN Economic Cooperation and Supply Chain Connectivity in Response to the COVID-19 Pandemic. This plan encourages participants to share information and best practices for improving trade. It also strengthens economic ties and cooperation.
4. Innovation, research, and development
ASEAN nations are committed to science and innovation — each year, the ASEAN NEXT event brings together companies, researchers, and policymakers to encourage business development and investment in science and technology.
This region also has a 10-year plan for promoting innovation through 2025. Policies for this plan undergo review to determine how well its programs work and how to make changes for improvements.
This focus on innovation and research makes the ASEAN region an ideal location for businesses based in the Netherlands to put forward improvements for the area.
Top ASEAN countries for businesses based in the Netherlands to expand to
While many of these nations present business opportunities for companies from the Netherlands, the following offer distinctive advantages for growth:
1. Singapore
Singapore and the Netherlands share ties that go back 400 years. Today, that connection remains strong. This ASEAN country is an ideal place for growing businesses from the Netherlands to branch out for international growth.
Singapore has had a trade agreement with the European Union (EU) since 2019. This agreement lowers tariffs and, in some instances, eliminates them. Both Singapore and EU countries have established market access to each other, and the agreement ensures the protection of companies’ intellectual properties. Reduced tariffs and extra protection help improve profits for the 89 percent of small to medium-sized businesses based in the Netherlands that export to Singapore.
Companies interested in financial technology, also known as fintech, will find Singapore an ideal location to expand to. The country serves as a hub for regional banking and is committed to fintech innovation. When Singapore hosted the 2018 Fintech Festival, it attracted over 30,000 attendees.
Singapore’s prime location makes it easy to connect with other Southeast Asian countries. The airport connects to 210 cities, and the seaport directly links to 600 other ports worldwide. This infrastructure facilitates easier exports around the globe.
2. Indonesia
Indonesia presents additional opportunities for startups based in the Netherlands. This country has the largest population among ASEAN participants and consistent GDP growth, averaging 5 percent annually. The market growth and increased internet usage have also boosted tech-enabled businesses.
Indonesia’s growing economy and its new startups will benefit from international companies with experience and expertise in fintech, water or waste management, health care, agriculture, and logistics. Businesses of these in-demand sectors may find greater opportunities for expansion within Indonesia by tapping into the country’s needs to serve its growing and increasingly tech-savvy population.
Instead of collaborating with Indonesian startups directly, businesses based in the Netherlands may consider establishing branches within the country and hiring local talent.
3. Vietnam
Vietnam and the EU have close economic ties. The EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) strengthen this connection. The EVTFA passed in 2020 and went into effect in August 2021. The EVIPA will go into effect once all EU members ratify it. The Netherlands is Vietnam’s second-largest EU trading partner, which means that many companies based in the Netherlands will benefit from the free trade agreement.
The Netherlands and Vietnam share several common sectors in high demand, including agriculture, aviation, maritime, and water. Consequently, many companies from the Netherlands in these sectors already have the type of businesses that will fit well into the Vietnamese market.
Even before the EVFTA passed, many companies based in the Netherlands did business in Vietnam. Companies that focus on sustainability and innovation are especially well suited for growth in this nation.
The Netherlands funds a project called Strengthening Women Entrepreneurship in Vietnam (SWEV) – reinforcing the ties between the countries. This project works to narrow the gap that businesswomen and entrepreneurs face in Vietnam, contributing to the country’s equality initiatives.
4. The Philippines
The Philippines has long been a site for development and investment. After the U.S. and Japan, the Netherlands is the third-largest outside investor in this country. Both countries benefit from imports and exports to and from one another, making the Philippines an ideal environment for companies based in the Netherlands to grow.
The Philippines also offers a burgeoning market. From 2009 to 2019, the nation’s gross domestic product per capita (GDP PC) growth was 82.9 percent. This value placed the Philippines at number 26 out of 187 countries for GDP PC growth. In comparison, the Netherlands experienced a slightly negative value for the same period, -0.35 percent, placing it at number 163 out of 187 nations. Companies based in the Netherlands that expand to the Philippines can tap into this growing market.
5. Malaysia
In recent years, Malaysia has been actively working to grow its economy by focusing on 10 main economic areas, five of which align with major industries in the Netherlands. These five sectors are:
- Energy
- Agriculture and food
- Bio-based economy
- Life sciences and technology
- High-tech systems and materials
Among these industries, the energy sector is one of the largest. While petroleum products are important to the nation’s energy production, oil and gas are not the only types of energy the country produces.
Malaysia has created a National Green Technology Plan to encourage the development of cleaner energy sources through government-backed tax incentives. Companies in the sustainable energy sector may qualify for these tax benefits for developing green technology. The waste from the palm oil industry in Malaysia offers ample resources for biofuel.
The Malaysian Dutch Business Council (MDBC) provides opportunities for networking and access to business services within the country. While this nonprofit group does not create a business in Malaysia, it helps companies get the local support they need.
What do companies based in the Netherlands need to grow internationally into Southeast Asia?
To effectively grow in any country, companies based in the Netherlands need to know the economic conditions and local requirements. Globalization Partners’ eBook, Guide to Expanding in Southeast Asia, offers an in-depth look at factors like market conditions, national business requirements, local talent availability, and the advantages of working with an Employer of Record in ASEAN. Here’s an overview of some key tips.
1. Research the market
ASEAN offers a unified economy and a trade arrangement that facilitates economic and market growth between member nations. However, the greater trade region does not necessarily represent the market concerns of every Southeast Asian country. Even regions within a country can differ in their market and needs. Make sure to research the conditions of the country where you will grow your company to ensure success.
2. Learn about each country’s requirements
Business requirements will differ depending on the country. You need to know the local requirements to operate your business, hire talent, and participate in the market. For instance, you may need to create local partnerships with shareholders or regional firms.
3. Hire local talent
Hiring local employees will help your company build a strong connection with the people and business operations of the country. You can also avoid the costs and logistics that come with bringing team members from the Netherlands into a new country.
4. Work with an Employer of Record
Using an Employer of Record is the easiest way to grow your company in a Southeast Asian country. Globalization Partners has in-country subsidiaries that act as official employers within specific nations. When you hire through our entities, there’s no need to spend time and money establishing your own subsidiaries. This arrangement can help you hire employees faster and stay compliant from day one.
Contact Globalization Partners for help with your business expansion
Business growth into ASEAN countries doesn’t have to be complicated. With experts in international employment laws and HR methods, Globalization Partners can facilitate your move into other parts of the world. We have an established network of subsidiaries to make hiring your workforce simple, fast, and compliant.
Get all the information you need to know about growing your workforce globally with our eBook, Global Hiring Handbook. This valuable guide offers tips for finding and managing staff in 20 of the hottest business growth markets around the world. Ready to start your expansion into ASEAN countries or elsewhere? Contact Globalization Partners to request a proposal.
