ASEAN SMBs contribute more than 60 pc to ICT spend

SINGAPORE: Small and medium businesses (SMBs or companies with less than 1,000 employees) in key ASEAN countries are on track to spend US$24 billion on ICT products and services in 2009, up by about five per cent over 2008, and about half the pre-crisis forecast growth rate.

Even at a much reduced growth rate of five per cent, the ASEAN region will still perform better than other regions around the world, and is a market that all ICT vendors should not neglect in their growth and expansion plans,” according to the latest ASEAN opportunity analysis by Access Markets International (AMI) Partners, Inc.

“Among all ASEAN countries, Singapore SMBs, which constitute about 13 per cent of the total SMB ICT spending, is expected to chalk up the slowest growth. Hence, ICT vendors are increasingly looking to SMBs in Indonesia, Malaysia, Thailand, Philippines and Vietnam to help achieve their regional revenue growth targets,” according to Tram Tong, a Singapore-based research analyst with AMI-Partners.

Given these markets are much larger geographically than Singapore, and that there are varying ICT maturity levels across various cities in each country, targeting SMBs in a random manner across the whole country will not be effective, especially for vendors wanting high-impact success with limited resources, time and budget. Also, with the crisis still looming, it is becoming evident that ICT vendors need to have a realistic geo-expansion strategy and laser-sharp decision-making process in order to enhance their footprints in the ASEAN markets.

“In almost all of the ASEAN countries, the top three major cities contribute to around 40 per cent of the country’s ICT spending. These cities are Kuala Lumpur, Johor Bahru and Shah Alam for Malaysia, Jakarta, Surabaya and Medan for Indonesia, Bangkok, Nakhon Ratchasima and Chiang Mai for Thailand, Makati, Manila and Quezon for the Philippines, and Ho Chi Minh, Hanoi and Binh Duong for Vietnam,” says Tong.

“In 2009, small businesses in the key ASEAN cities will spend US$10,000 to US$15,000 on ICT, except for Singapore, where small businesses (SBs) are expected to spend about 40 per cent higher,” Tong said. “Medium businesses (MBs) in the top three cities of Malaysia are expected to be the second highest ICT spenders, behind Singapore MBs, and for the rest of ASEAN region, MBs in the key cities of Philippines, Vietnam, Thailand and Indonesia, will spend approximately eight to ten times more on ICT than SBs.”

In terms of technology, SMBs in the key cities of Malaysia, Indonesia, Philippines, Thailand and Vietnam will spend most of their 2009 ICT budget on computing hardware, such as PCs, servers, printers and printing supplies, and telecom services, which is reflective of the early stage of ICT adoption for some of these SMBs.

Even though the ASEAN region is expected to experience lower growth in 2009 compared with previous years, well-informed vendors can still grow by having a focused go-to-market approach. Vendors should target key city markets using intelligence and insights from deep research and analyses to ward off any lingering effects of the global crisis.