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What's it Take to Do Business in
South East Asia?

The first step in being successful in South East Asia is not assuming that business is done like it is in the US.

by Kit Werremeyer
President, Southernstar Consultants, LLC
and Valerie Lynn
Principal, VLM Consultancy, Inc.
Kuala Lumpur, Malaysia

You are a US businessman and you want to take a look at doing business in South East Asia.

To many Americans, hearing the term “South East Asia” brings back old memories of the US military involvement in Vietnam in the 1960’s and 1970’s.

Times have changed. So has South East Asia. Today, South East Asia, a diverse mix of countries, peoples, cultures, religions and politics, offers many good opportunities for US businesses interested in working or investing there. U.S. companies working in South East Asia range from newcomers to the region to companies that have been working in Southeast Asia for over 100 years.

The countries of South East Asia are: Myanmar (formerly Burma), Thailand, Laos, Cambodia, Vietnam, Malaysia, Singapore, Brunei, Indonesia, and the Philippines. These ten countries are the members of an organization called ASEAN. ASEAN is the acronym for the Association of South East Asian Nations. ASEAN promotes the mutual interests and solidarity of the ten member countries.

Thailand, Malaysia, Singapore, Brunei, and the Philippines offer stable political, legal, banking and business environments. Indonesia continues going through a transition to a more democratic form of government and is trying to implement positive changes in their legal, banking, and business environments. Laos, Cambodia, Vietnam and Myanmar are significantly less developed and have much less certain legal, banking, political and business environments.

The ASEAN countries are rich in natural resources and people resources with a regional population of 600,000,000 or 8.8% of the world’s population, and a combined GDP of USD $1.5 trillion. If ASEAN were a single entity, it would rank as the ninth largest economy in the world.

1.     US                      6.     Brazil
2.     China                 7.     United Kingdom
3.     Japan                 8.     Italy
4.     Germany            9.     ASEAN
5.     France

All of the ASEAN countries are interested in foreign investment and can provide varying degrees of tax and financial incentives to foreign companies willing to invest in their country’s economic improvement.

A work force of college and university educated people, skilled labor, and unskilled labor, with diverse language abilities is readily available at very competitive rates.

What does it take, for a US company to do business in South East Asia? Here are some things to think about:

Patience is Golden

The most important element of doing business in South East Asia is patience. You will need plenty of it. Things just don’t happen as quickly or efficiently as you might like. If you are used to closing deals in one or two meetings back home, you may have to have two, three, four, five, or more meetings to achieve the same result in South East Asia. Everything takes more time to do in South East Asia.

With nearly all business communication taking place instantly or very quickly via email, be aware that it is an Asian tendency not to respond to emails if they do not have a response to your questions or enquiry. Therefore you can expect responses may take two to five days or more to receive a response. In order to ensure that your efforts do progress, always give whomever you are communicating with a target date for their reply to move the process along.

Walk the Talk

English is widely spoken and widely used in all the countries, especially in the business communities and you will be able to conduct most of your business in English.
However, it will always be a plus for you to be able to speak a little of the local language as in greetings, thank you, and good bye.

Take the time to learn how to say a few phrases in the local language: “Good morning”, “How are you?”, “Nice to meet you”, and “My name is ….”. Even if you don’t say these greetings very well, your foreign counterparts will be pleased that you at least made an attempt. It breaks the ice when meeting people for the first time. However, be prepared for misunderstandings to occur as English will be the second language of the people you are dealing with and their skill levels in the use of English will vary.

Be patient, speak slowly (or slower), clearly, quietly, and avoid the use of complicated sentences and slang. The written communication of your Asian counterpart may not be perfect so therefore it is wise not to be judgmental nor to correct their written capabilities. It would be more productive to respond in simple written English.

Time and Money

Be prepared to spend time and money developing and establishing your business. Just because you arrive in one of the countries with the worlds best widget in your pocket doesn’t guarantee you instant success. It will require time and money to develop your local business support services, arrange for and receive necessary local government permits, promote your products, and meet your local business contacts and prospective clients. The same holds true if all you are looking to do is to develop a local supplier for export of goods or services back to your country.

Get some help

Actually, get some local help. Forget about trying to be superman and doing it all on your own, or you’ll take an early and frustrated exit from the country without results. Having a local associate, agent, or employee is a good idea. You will need someone to provide assistance to you as you work your way through the local business, political, legal and cultural system.

It really helps, too, to have a local associate who speaks the language and can help get you from point A to point B in a hot, jam-packed city, or find a remote site way out in the countryside.

If you intend to establish a company in one the ASEAN countries you should contact a local accounting and legal firm to advise you on rules and regulations your new company would have to follow. A number of US accounting and legal firms have subsidiaries in the ASEAN countries.

Partner, Partner

Having a local business partner can make sense, but may not be absolutely necessary. Don’t rush into signing up the first company or individual that claims he or she can open up all the local back doors to businesses and politicians.

Remember, do your due diligence and investigate a potential partner through the resident country’s trade association or embassy in your home country. They may or may not be able to assist you but often can give you further direction. Once you agree to take on a partner, you’ve got him, for better or worse, for a long time. Your new partner may be “politically in” today, and “politically out” tomorrow. Careful is the watchword here. Take your time, as you can always bring in a more permanent partner or investor at a later date.

The US Foreign Corrupt Practices Act

All US businesses and their foreign subsidiaries are subject to the US Foreign Corrupt Practices Act (FCPA). The FCPA makes it a crime to bribe local government officials in order to obtain new business or keep existing business.

This act applies as well to any bribery of local government officials by the local employees or partners of a US subsidiary.

If you intend to have a local partner or company, then perform a thorough written due diligence report on that individual(s) or company and keep a copy of it. Any written agreement between your US company and your partner’s local company or individual(s) must contain a clause incorporating by reference the provisions of the FCPA as may from time to time be amended.

The FCPA allows for what are called “facilitating payments”. The US Justice Department can provide clarifying information on facilitating payments.

Details of the FCPA can be found at:

Culture shock

The countries of South East Asia have many cultures, customs, no-no’s, and religious practices. Just because you finally figure out how you can comfortably work with the folks in Singapore, doesn’t automatically mean you can apply the same formula to the folks in Indonesia or Thailand!

You will find there are many similarities in working with the people and respecting the cultures in each of the South East Asian countries. You will find there are many differences, too, and this is where having a good local associate is very valuable. He can keep you out of cultural trouble.

Here are some examples of social behavior to observe: In Thailand, don’t say anything bad about or make fun of the King or Queen, or you could end up in trouble with the law. In Malaysia, if a man and his wife are introduced to you as Datuk and Datin, that’s not their first names; those are conferred titles.

In Indonesia, the largest Muslim country in the world (240,000,000 population), it would be in very poor taste to offer pork to your local guests. In Burma, don’t pat the little kids on the head. They are Buddhists, and they believe the head to be the highest and most revered part of the body. In Singapore, Lee Hsien Loon is the Prime Minister; his last name (surname) is Lee, not Loon. Hsien and Loon are his Chinese given names. Chinese people place their last name first when introducing themselves. You would address him as Mr. Lee, not Mr. Loon. How would you like to be called Mr. Bob?

In doing business in South East Asia, it is important to understand the social and religious customs and practices of the people in the different countries. It isn’t too hard to learn about these customs and practices and follow them in your everyday dealings with the local people.

Knowing and applying these social and religious customs and practices will certainly help you be successful in your business activities as it will be observed as a sign of respect. Many western business people come to Southeast Asia without any cultural awareness. This is viewed negatively by the local people. Generally people from this region are familiar with the U.S. due to the regular coverage of US news, politics, economics in their national newspapers, TV news. Popular American TV and reality shows, books and magazines are also widely available. Advent of the internet and search engines with specific domain and translations capabilities allows for easy research of US news and vice versa.

Center for Strategic and International Studies

If you would like to do business with Southeast Asia whether you want to break into the market to sell a product or service via distributors, establish operations, search for a joint venture or outsource to third party contract manufacturing, an organization that you should be aware of is The Center for Strategic & International Studies which is a think tank based in Washington D.C., website

Specifically the CSIS Southeast Asian Program is the premier forum for sustained high-level policy dialogue focusing on Southeast Asia and the US business interest in the region. Subscribe to its newsletter as it is an excellent source of information to understand US government initiatives are for the region which directly relates to present and future opportunities for US businesses.

Trans Pacific Partnership (TPP)

Have you heard of the Trans Pacific Partnership (TTP) also known as the Trans Pacific Strategic Economic Partnership Agreement? It is a multilateral free-trade agreement that aims to further liberalize the economies of the Asia-Pacific region. The US government has taken the lead role in its advocacy.

The original agreement between the countries of Brunei, Chile, New Zealand and Singapore was signed on June 3, 2005, and entered into force on May 28, 2006. Six additional countries – Australia, Malaysia, Peru, Japan, United States, and Vietnam are negotiating to join the group.

The objective of the original agreement was to eliminate ninety percent of all tariffs between member countries by January 1, 2006, and reduce all trade tariffs to zero by the year 2015. It is a comprehensive agreement covering all the main pillars of a free trade agreement, including trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy.

TPP advised that the value of 2011 US trade with its SEA members is as follows:

Vietnam:             US$20 Billion
Malaysia:            US$37 Billion
Singapore:         US$46 Billion

The US has had a bilateral Free Trade Agreement (FTA) with Singapore since 2004 which secured a U.S. presence in Southeast Asia and provided a standard of free trade that encourages a high level of liberalization. In 2010, Singapore was the United States’ 10th largest export market at over $29 billion.

Bilateral economic and trade cooperation between the United States and this dynamic region is reaching new levels.

Backdoor to China and India

US companies remain focused on doing business with China and India. However more experienced business persons are realizing the value that the long term relationships the countries in ASEAN have with China and India. Nowadays many of the ASEAN countries have extensive trade links to China and India. US companies that choose to do business via Southeast Asia are benefitting from such established linkages and trade agreements between the ASEAN countries and China and India.

Have you done your homework?

There are many resources available to the US business person interested in learning more about doing business in South East Asia.

Economic Officers resident at the US Embassy in each of the countries can help provide country specific business information.

For a listing of US embassies in South East Asian countries see: The US Commercial Service, a division of the US Department of Commerce, also provides resident Commercial Counselors to help provide country specific business information. The main role of the US Commercial Service is promote the sales of US goods and services to foreign countries. For a listing of US Commercial Service offices in South East Asian countries see:

The US Commercial Service may charge a fee for certain of the services it provides. These Commercial Counselors and Economic Officers are excellent sources of information on the ins and outs of doing business in the country.

All the ASEAN countries have an active American Chamber of Commerce organization. This is an organization consisting of US and local business persons who are living and working in the specific country. Each Chamber offers varying services; some are also able to organize meetings for companies interested in doing business in the country. These meetings are excellent opportunities to learn about doing business in the country from American and foreign companies actually working there, however there are associated charges for such services. For a listing of US Chambers of Commerce abroad see:

Modern business environment in ASEAN

The modern day business environment in ASEAN is challenging. It is also dynamic, high growth, and very opportunistic at this time as it is poised for growth. ASEAN was not impacted by the recent financial crisis as severely as other regional economies around the world.

It is a region that should be approached realistically and systematically. Prior to any action advice should be sought from a reliable source preferably upon recommendation. Attempt to fully understand what you will be facing, such as significant time differences which can make communication challenging, more public holidays than in the US and prepare to visit the region a few times if you do not have any representation. Don’t try to change the system or the business culture because as a foreigner you must fit in with their culture to be successful, not the other way around.

SPECIAL SECTION -- The Socialist Republic of Vietnam (Vietnam)

The Vietnamese economy is at the heart of the fast-growing Southeast Asia region and is one of Asia’s great success stories. Vietnam’s economy has grown rapidly since the country opened its economy in the 1980s. This country with a population of 87 million, has posted annual per capita growth of 5.3%.

Vietnam has also prospered by choosing to open itself more broadly to the outside world, joining the World Trade Organization (WTO) in 2007 and normalizing trade relations with the United States. These steps have helped to ensure that the economy is consistently ranked as one of the region’s most attractive destinations for foreign investors. Despite the recent volatility in global markets, China is the only Asian economy to have grown faster than Vietnam since 2000.

Vietnam’s growth has been relatively balanced, with the industrial and services sectors each accounting for about 40 percent of annual output. Thanks to an abundance of low-wage labor, Vietnam’s manufacturing sector grew at 9% annually from 2005 to 2010. Vietnam has also expanded its exports of manufactured goods, especially products such as textiles and footwear. The liberalization of services created opportunities for rapid expansion across a range of sectors including retail and transportation. The nation also boosted its tourism infrastructure and experienced a surge of interest in residential and commercial real estate. Vietnam’s exports of commodities such as rice and coffee have also grown briskly.

As Vietnam continues economic development by liberalizing its economy and strengthening its growth policies and infrastructure it is becoming a more attractive option to US companies seeking alternative trade and investment to China. In February 1994 the US lifted its trade embargo against Vietnam and restored full diplomatic relations in July 1995. In December 2001 the two countries signed a bilateral trade agreement. The United States and Vietnam still have differences on issues such as human rights, but even so they have started talking about negotiating a “strategic partnership.” Vietnam is now the United States’ 45th-largest trading partner with two-way trade reaching nearly $19 billion in 2010.

The U.S.-Vietnam Road Map proved to be an invaluable mechanism as the two sides addressed subsequent trade issues that surfaced due to the fact that Vietnam is a communist country governed by socialist laws. It provided the United States with an opportunity to spell out exactly what it was looking for and gave the Vietnamese clarity and confidence about what they would get in exchange for specific steps they took. As Washington and Hanoi normalized relations, more overseas Vietnamese returned to Vietnam bringing investment and technical skills, which helped Vietnam develop as it liberalized its economy and opened up to foreign investors.

The population of Vietnam is large enough to make it second most populous country in the South-East Asia (behind Indonesia), seventh in the Asia-Pacific region and the 12th most populous in the world-list. One should also notice that the ratio of literate persons is high in Vietnam and the majority of the population is young. As the U.S.-Vietnam Bilateral Trade Agreement opens up new markets for U.S. goods and services, the Vietnam market represents the next great opportunity for all types of American companies.

However, doing business in Vietnam, like most foreign countries, can still be challenging and any business person should perform adequate due diligence on local businesses it intends to do business with, whether it is for import or export.

Having local representation on the ground may allow business transactions to progress in a short time period than via telephone and email. Remember in Asia people still like to meet and greet the people they are going to do business with, shake their hand or share a meal, not to say that business cannot be facilitated via the internet and multimedia communication. It may take longer than you expected. As mentioned previously patience is king when doing business in Southeast Asia.

If you are interested in purchasing goods manufactured in Vietnam or are attempting to expand your business into this country contact the US Chamber of Commerce in Hanoi or Ho Chi Minh City (formerly Saigon), as well as a Vietnamese chamber of commerce or business organization in the United States. These organizations are a good starting point and can advise or give you direction on initial steps to take. Attending business briefings and country presentations on doing business with Vietnam that are held in the U.S. is another way to begin networking with people, organizations and companies that specialize in business with Vietnam.


There are also many internet websites with information on the countries in South East Asia. Check out the following websites:

• The CIA World Factbook provides general information on all the countries in the world. You can also find contact information for US embassies in the countries. Go to this website and click on “The World Factbook” under Library and Reference. See:

• The US-ASEAN Business Council, Inc. provides excellent business related information on the South East Asian countries and on US businesses working there. This site is devoted to promoting US business interests in the ASEAN countries. See:

• The website maintained by ASEAN and is an excellent source of business, political, social and economic information on all the ASEAN countries. See:

• The US Small Business Administration provides a number of services for US importers and exporters. See:

• SCORE can provide free business counseling service for US business persons interested in international trade. SCORE has 365 offices in the US. To find an office near you, see:

Doing business in South East Asia will be challenging and often frustrating for a business person who is unprepared. However, for the business person who has patience and does his homework well, the opportunities and rewards are there.

© Kit Werremeyer and Valerie Lynn January, 2012




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