Apart from China, opportunities abound in Vietnam, Malaysia and Indonesia. OH BOON PING takes a look at the brighter sectors

WE have often heard of companies expanding their operations to China, but tremendous opportunities also abound in other regional countries like Vietnam, Indonesia and Malaysia. Take Vietnam, for instance. Untapped potential lies in its township sector, and the country is one of the fastest growing economies in South-east Asia with a GDP increase of 8.4 per cent last year.

This robust economic performance has led to a housing boom in recent years. Rising affluence means more Vietnamese now have the financial means to buy their own houses, and pursue higher quality living in well planned residential areas.

In addition, the Vietnamese government is actively pushing for high-rise living in city centres to accommodate their growing population. Already, Hanoi and Ho Chi Minh City are facing shortage of urban land for housing in the city centre districts.

According to IE Singapore, the 'Singapore' brand name in housing development is well established and highly regarded internationally for its premium quality, reliability and professionalism.

This means that local companies with extensive experience and expertise in this area can potentially market their project management experience, innovation and reliability, and also offer professional services along the entire value chain from master planning, architecture, design, and construction, to estate management.

Indeed, Kingsmen Creatives executive director Simon Ong said opportunities also exist 'in the retail and exhibition sectors. With more affluent and sophisticated consumers, coupled with increased urbanisation, it has created a boom for the retail business. The meetings, incentives, conventions and exhibitions (MICE) industry is also doing well ... we expect the growth for these two sectors to continue and are very excited about it.'

Meanwhile in Malaysia, IE said that demand for consumer products and lifestyle products is expected to grow as the country pushes ahead to be a developed nation by 2020. The government in Malaysia has dedicated additional resources under the Ninth Malaysia Plan and the third industrial master plan to ensure that Malaysia meets the target.

The key areas of focus are to move the economy up the value chain, develop human capability and improve the quality of life. Some of the markets worth looking at include Sabah and Sarawak. Under the Ninth Malaysian Plan, for example, a total of RM13.4 billion (S$5.7 billion) has been allocated for development projects in Sarawak, significantly more than the RM12.8 billion allocated in the Eighth Plan.

The potential growth sectors in Malaysia include transport, retail and tourism. According to a Household Expenditure Survey - 2004-05, a rising proportion of household spending was set aside for the purchase of transport and communication goods.

Growth in the wholesale and retail trade, hotels and restaurants sub-sector is estimated at 6.5 per cent this year supported by favourable consumer sentiment and strong business confidence as well as healthy labour market conditions.

Retail spaces has also recorded higher activity with a 1.4 per cent pick up in the incoming supply at end-June 2006, while overall occupancy rate of retail space stood at 80.1 per cent. The active retail market is boosted by steady consumer spending and optimism in the retail trade business.

Tourism arrivals are also expected to rise by 6.7 per cent to hit 17.5 million in 2006 and Malaysia remains a popular destination for Asean tourists.

In any venture, risk is inevitable. For Singapore companies looking to venture into Indonesia it is necessary for businessmen to perform a comprehensive preliminary research to gain market knowledge and information through site visits for instance to understand the environment in which they wish to venture into.

Businessmen have to understand the political, economic and socio-cultural factors that determine the business operating environment of that particular market.

Likewise in Indonesia, businessmen need to assess the risks involved in setting up operations in the region, with the appropriate market knowledge and risk management strategies, many Singapore companies have successfully ventured into the region.

Indeed, listed-firm Tiong Woon Corporation is optimistic that the 'economic environment of Indonesia will improve under the current government reforms. As such, we hope to secure more heavy lift and installation works for oil and gas, and petrochemical projects in this market.

'With the recent cooperation between the Singapore and Indonesian governments to develop Special Economic Zones in Batam, Bintan and Karimum Islands, we are also looking at investment opportunities to provide valued added services for oil and gas projects for our customers in this region.'

The Economic Development Board said that Singapore and Indonesia are keen to promote economic cooperation between the two countries, particularly on the islands of Batam, Bintan and Karimun.

The EDB said a framework agreement for this was also inked between Singapore and Indonesia that will see the two parties working together to develop and enhance the business environment and the industrial infrastructure, streamline the policies and also cooperate in the areas of enhancing taxation, manpower and immigration laws, among others.

One sector to look at in Indonesia is the information and communications technology market, valued at US$1.4 billion in 2003, and has one of the largest growth rates in Asia-Pacific at 21 per cent, compared to the region's average of 6 per cent.

By 2008, the market is expected to grow to US$2.59 billion, with the banking industry contributing the most. The banking sector, together with the financial services and insurance sector account for 29.8 per cent of the total IT spending.

Another potential is the retail sector, with consumption accounting for up to 70 per cent of Indonesia's gross domestic product.

In China, there is a new wave of opportunities for companies in the second tier cities, such as Tianjin, Shenyang, and also inland cities like Chengdu and Xian.

The Bohai Rim Region is also a bustling area of interest for many companies. Depending on the stage of development the city is in, there could be different areas of opportunities available for our companies.

For Chengdu, which is developing, there are opportunities in infrastructure, real estate, and related services such as master planning and consultancy. In addition, there is potential in the retail, F&B and wellness sectors.

This is the second of a four-part series brought to you by HSBC Commercial Banking