Middleweight regions are next ASEAN growth hotspots – study

Sofia Tomacruz

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Middleweight regions are next ASEAN growth hotspots – study
A report titled 'Rethinking ASEAN' dispels common beliefs that megacities like Manila, Bangkok, and Jakarta are ASEAN's sole growth hotspots

MANILA, Philippines – Middleweight regions, or those with populations of 500,000 to 5 million, are the next big bet for growth in the Association of Southeast Asian Nations (ASEAN), according to a recent consumer report.

The report, titled “Rethinking ASEAN,” also dispelled common beliefs that megacities like Manila, Bangkok, and Jakarta were ASEAN’s sole growth hotspots. 

The study was done by the global performance management company Nielsen NV and the strategy advisory firm AlphaBeta. It was released to the media on Wednesday, July 5. 

“Up to half of the top 10 markets in many consumer goods categories are from regions with less than 5 million people,” the report said. 

“While ASEAN has been enjoying economic recognition in recent years, businesses tend to view it as a single entity and surprisingly, little is known about the many cities and regions that make up the archipelago,” said Patrick Dodd, president of Nielsen Growth Market Groups. 

He added, “It’s time for companies to look beyond megacities to see the growth opportunity hotspots within middleweight regions…This makes it crucial for companies to take a granular approach to understanding market opportunities in ASEAN.”

The study also stated that contrary to the notion that Indonesia was the biggest market in ASEAN, the Philippines had a greater share of demand for major commodities.

CONSUMER LANDSCAPE. The 'Rethinking ASEAN' report cites features of what it describes as the real ASEAN consumer landscape. Graphic from 'Rethinking ASEAN' report

Growth drivers

The report attributed growth from the middle regions to 6 main factors:

  • cross border trade and logistics
  • presence of economic clusters and business process outsourcing areas
  • rise of satellite regions
  • tourism
  • a growing consumer base
  • rich natural resources

Dodd explained that growth in these middleweight regions was likewise a combination of these growth-drivers, and allowed for regions other than megacities to become consumer hotspots. 

It added that companies, which look into growing its presence in ASEAN needed to study countries not just at a national level, but also at more regional and local levels.

According to the study, different consumer landscapes are present in regions within a country citing, “Growth rates can be more than seven times larger for some regions within countries than the national average.”

In addition to this, the report stated that several ASEAN cities may also possess larger consumer demand growth than countries themselves by 2030. 

Dodd said this showed the need for companies to take a more granular approach when looking into ASEAN and its countries.

“While country-level analysis provides a holistic view of the market landscape, it does not show demand growth between regions within a country, which can differ substantially,” said Dodd.

He added, “When targeting consumer markets, looking at country-level data doesn’t cut it anymore.”

The report studied current and potential consumer demands for over 700 cities and regions of the 7 largest ASEAN economies: Indonesia, Thailand, Malaysia, Singapore, Philippines, Vietnam, and Myanmar to forecast the region’s growth hostpots to 2030. 

The study classified 3 main tiers for cities according to population size, namely, megacities with a population of over 5 million; large middleweight regions, which have populations of one million to 5 million; and small middleweight regions with populations of 500,000 to one million. 

It covered demand for 10 product categories including chocolate, instant noodles, carbonated soft drinks, beer, cigarettes, shampoo, laundry detergent, baby diapers, facial mosturizer, and vitamins. – Rappler.com 

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Sofia Tomacruz

Sofia Tomacruz covers defense and foreign affairs. Follow her on Twitter via @sofiatomacruz.