Article: How ASEAN’s rising logistics market is creating jobs


How ASEAN’s rising logistics market is creating jobs

With the renewed focus on ASEAN markets among many digital marketplaces, the region has witnessed a boom in its logistics market. This has led to the creation of more jobs across the region. But not without its own set of problems.
How ASEAN’s rising logistics market is creating jobs

The growth of ASEAN markets has been a welcoming development for the global market. Countries like Indonesia, Singapore, Malaysia, and Thailand have been cited as some of the top performing developing economies within the region, and even globally. Today it boasts a healthy ecosystem that allows businesses to grow and due to sustained efforts within the ASEAN block, inter-country coordination to meet mutual business interests in terms of access to markets and talent have enabled many outside players to take an active interest in the region. Among which one happens to be Jack Ma’s Alibaba Holding, one of the largest e-commerce entity in the world. 

Southeast Asia is "a region that is a key part of Alibaba's global growth strategy," the Chinese company stated in a press release. It acquired Lazada in 2016 as part of a move to expand into Southeast Asia and increased its stake in 2017. The Singapore-based online retailer recently announced that raised $2 billion from Alibaba. Alibaba also invested in Indonesia's e-commerce company Tokopedia last year. 

The Chinese e-commerce giant has been steadily expanding into the markets of its Southeastern neighbours, and over the years the potential of growth witnessed has kept the company interested in further investments in the region. But it isn’t the only big e-commerce player in the region. Amazon too, with its interests peaked by a growing number of e-commerce users in the region, has begun expanding aggressively across ASEAN member states. Amazon, too, entered Singapore in 2017 in its first foray into the region, upping the competition among online retailers. Google too invested heavily in, the second biggest e-commerce company after Alibaba, which in turn has also pushed for a growing presence. This war among the two largest e-commerce companies in a region which is slowly experiencing a growing working population and rapid urbanization holds good news. Such competition usually brings invaluable investments into a country and help with the creation of newer, better-paying jobs. With the advent of such companies, newer tech finds its way to local markets and even existing jobs undergo significant changes. This has been true for the logistics market within ASEAN states.

The boom

The reason for this rising interest in Southeast Asian markets has been clear—a booming consumer base as the region boasts one of largest mobile adoption rates, with over 3.5 million users coming online each month, according to Adweek. This when combined with rising incomes and growing penetration of the internet in the region means that consumers’ preferences are evolving, with many becoming active users of e-commerce sites. The positive economic growth in the region has led to the expansion of middle-class population. Projections on the rise of e-commerce sector in the region, like a recent Google report that showed that the size of the such an Internet-based economy could reach a size of $240 billion by 2025, even excessing the mark by some estimates give a better idea of what behind this renewed focus. Today its home to over 650 million people with diverse demographics all spit among 11 dynamic markets with their own policy and demographical nuances that stem from the fact that many today are at different stages of development. All this today are fuelling the boom in e-commerce and other tech-driven online marketplaces. 

But when it comes to the success of e-commerce companies, the existence of proper logistics delivery mechanism is important. Even with the presence of a growing demand can do little on its own to ensure demand leads to a rising in supply, and in turn job creation. This is where investments from Chinese companies have benefitted the region. 

China today boasts one of the largest logistics markets in the world. With companies like Alibaba and chines, markets have witnessed the growth of their regional logistics system to a point where market almost seems saturated. To get an idea of their size, Alibaba’s logistics affiliate Cainiao recently announced that the first 100 million parcels generated during the shopping festival were delivered in 2.6 days, beating its previous record by nearly five hours. Cainiao said it processed one billion orders from the Double 11 shopping spree for the first time, significantly higher than last year’s 812 million. According to statistics from the State Post Bureau, around 1.35 billion delivery orders were placed by major e-commerce companies on Singles’ Day, a 25.12% increase from the same time last year. Postal services and express couriers across the country handled 416 million parcels on the shopping day, a record 25.68% year-over-year increase.

Job-creating sectors

Such growth today has meant that companies like Alibaba are actively looking at foreign markets to build similar systems of logistics to improve retail delivery across Southeast Asian markets. Countries in this region often differ in their structural and policy frameworks mean that it is often not a very smooth journey. The markets in the region are still developing and under the increased pressure of the growing the connected population, the demand for better logistics will give rise to the more systematic and job-creating sector.  This not to say there have been significant improvements in the sector. According to the Logistics Performance Index, a biannual report published by the World Bank. Indonesia jumped 17 positions to 46th place out of 168 countries covered in the report. But although such developments are necessary to tap into the latent potential of the region, structural impediments still ply a big role. For example, Indonesia, a country that accounts for most of the region’s e-commerce market, still has some of the highest logistics costs across the region. According to Forbes, this accounts for 24 percent of the country’s GDP. This while the ratio in neighbouring countries, like Thailand and Malaysia reached 13.2% and 13%, respectively, ensuring their markets are able to better leverage such growth potential. TO ensure such rise of investments into the region lead to more jobs being created, such impediments would be crucial to overcome. 

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Topics: Technology, #Jobs

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