Ensuring our readiness for the challenges of upcoming AEC
January 31, 2014 00:00 By Vittakarn Chandavimol
From here on in, we have less than one year before the Asean Economic Community commences.
As the AEC opens up the region’s markets, we will be tested on our ability to capture the many opportunities and handle numerous threats. How well we can handle these elements will depend on our readiness and preparation in finding various opportunities amid constraints, as we will be able to trade freely as never before.
If we start by looking at the market size, which will increase tenfold from 60 million people in Thailand, our abilities to make the most of these opportunities will depend on the efforts taken to understand our new target consumers, and how well we actually understand them.
In looking at the overall picture, we can say that Asians share many similarities – from our physiques and hair colours, to our cultures. Although it is not exactly the same, the differences we have across the region are certainly less than the differences we have with the West. It is these similarities that can make it easier for us to understand and create opportunities in new markets.
However, an in-depth evaluation will reveal considerable differences across the countries, such as highly divergent levels of household income and population demographics.
Some countries are on the verge of being an ageing economy, while others have a large working-age population.
In clearly seeing these differences, we can assess and determine our strengths in developing products for specific groups.
In terms of our geographic location, we are exactly in the centre of the region’s logistics network, and we will be the AEC’s logistics hub. This will be beneficial to the property market, as it will require developers to expand their platform across a wider segment of the population, and contribute to the growth of many new cities.
There will be more services, and these highly labour-intensive services will result in greater urban population density. Thus there will be correspondingly higher demand for outright property purchases, as well as rentals. The demand for commercial buildings and retail spaces will also increase in line with greater numbers of expatriate investments.
Nevertheless, these opportunities are not only seen by us, as every country is doing its best to seek its opportunities, too. Therefore, it requires us continuously to develop our capacity in terms of financing, manufacturing and sales, since we are not only increasing our capacity to serve more customers but to also thrive against greater numbers of competitors.
We therefore have to find ways to improve our production in terms of increasing speed and quantity, while keeping our costs low. Finding good partners that have expert knowledge in different fields is one of the ways that we can give ourselves a competitive advantage.
In addition to these factors, companies have to be aware of regulations and various legal details that can have an impact on trade between countries. For example, even though it is relatively easy to invest in property markets across the region, there are many regulatory hurdles to contend with, including those governing ownership of land and residences, the process of designing and getting the proper licences and permits to design and construct projects.
There are also variations among industrial standards, so it is actually not that easy for operators to work overseas, especially since addressing these differences inevitably adds to investment costs.
The remaining 11-month period does not leave us much time to start understanding and preparing ourselves to compete in the AEC, but it is still not too late if we begin preparations now to take on the competition that will arrive at our doorsteps.