The rapidly evolving ASEAN consumer

Combined regional Gross Domestic Product (GDP) doubled between 2009 and 2022 to reach $3.6 trillion, at the heart of that growth is the rapidly evolving ASEAN consumer.

Growth in the ASEAN-6 countries of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam ponderously 3.8 per cent in 2023, rising to 4.5 per cent in the first half of 2024. This compares favorably to major economies, which grew at an average of 3.1 and 3.2 per cent over the respective timeframes.

ASEAN's story is one of continued consumption. Two trends are set to shape the future of that consumption, an optimistic but economically aware consumer, and one which is increasingly resilient and open to customer-centric products and services, a situation laid out in detail in the ASEAN Consumer Sentiment Study 2024, developed in partnership between Boston Consulting Group (BCG) and United Overseas Bank (UOB).

The findings demonstrate an intriguingly pragmatic optimism across the region. What's also clear, however, is more work is needed to unlock the full potential of this expanding consumer base. But how will this impact Vietnam and its consumers?

Vietnam is forecast to show the strongest growth of the emerging economies in Southeast Asia, with the World Bank projecting GDP growth of 6.6 per cent in 2025.

Meanwhile, the Vietnamese government has raised its 2025 GDP target from 6-6.5 to 8 per cent, signaling a more ambitious push towards achieving double-digit growth from 2026 onward.

The country's commitment to economic reform, coupled with its ability to attract foreign investments, positions it as a key player in the increasingly connected global economy.

Domestically, more than 60 per cent of its consumption by 2030 will be led by the increasingly digitally savvy younger generation. Brands need to design the right strategy to tap into Vietnam's rapidly expanding consumer opportunity.

Vietnamese consumers are carefully navigating the complex economic landscape, but are positive overall, emerging as the region's most optimistic consumers. The majority (84 per cent) of consumers display net positive emotions about economic conditions.

Consumer optimism is reflected through resurgence in the 'experiential' spending categories such as entertainment (eg, concerts/events/festivals), lifestyle (eg, spa/massage) and leisure travel alongside dining out—where spends have increased for about 42 per cent of Vietnamese consumers, especially Gen Z (47 per cent) and Gen Y (43 per cent).

This confidence in discretionary spends and overall optimism indicates the readiness of the Vietnamese consumer to bounce back after the long spell of macro-challenges and their thirst to enjoy products and experiences catering to their aspirations, and not just their needs.

Tourism is one clear area where this optimistic sentiment reflects strongly. High intra-regional travel within ASEAN has contributed to strong cross-border spending, particularly for Vietnamese travelers, 71 per cent of Vietnamese consumers have spent overseas within ASEAN in the past year.

More frequent traveling may also have catalysed the shift in payment preferences, as consumers lean towards alternative payment modes with higher convenience. The majority of Vietnamese consumers (71 per cent) prefer paying by physical or mobile credit/debit cards when traveling abroad, displacing cash as the most preferred payment method.

Vietnamese consumers have always been at the forefront of digital adoption. This is a digitally connected nation with growing opportunities. Internet penetration in Vietnam is 79 per cent, nine percentage points above the regional average. Vietnam has seen 20 per cent growth in its e-commerce sector in the past three years, and 77 per cent of consumers shopped via livestream in 2023.

Online is now the preferred channel for various activities, including performing local fund transfers and gathering information about new products. Having said that, around a quarter of Vietnamese consumers still prefer omni-channels for fraud reporting and seeking financial and investment advice–activities which are seemingly more complex and require higher levels of trust and support. This underlines the importance for banking and financial institutions to continue the path of hybrid channel strategy.

93 per cent of the Vietnamese consumers are interested in receiving personalized products and services from banks, where 73 per cent prefer personalized offers to be delivered via a mobile banking app and 68 per cent via email. This presents a clear opportunity for businesses to tailor products and solutions catering to the specific needs of different segments, going beyond traditional segmentation and venturing into hyper-personalisation.

The majority of Vietnamese consumers (73 per cent) are well-informed about the amount they need to secure a comfortable retirement. 91 per cent has an emergency fund to last them up to three months, and there is also a high degree of insurance ownership among consumers. This financially savvy reflects a growing awareness and proactive approach to financial planning in the country.

The response to evolving financial pressures has led to a shift in spending habits and financial behaviors, as well as purchasing preferences, with Vietnamese consumers increasingly seeking personalization and unique experiences in their purchases. This trend, along with accelerated digital adoption, presents significant opportunities for businesses to position themselves as future leaders.

By identifying untapped demand areas and delivering solutions through a strategic mix of hybrid approaches, companies can effectively meet the evolving needs of Vietnamese consumers. With these strategies in place, businesses will be well-positioned to thrive in this dynamic and growing ASEAN market.

Prime Minister Nguyen Xuan Phuc granted an interview on the outcomes of the Special ASEAN and ASEAN+3 Summits on Coronavirus Disease 2019 (COVID-19).

ASEAN finance sectoral bodies today achieved a milestone meeting towards Paris Agreement engagements by introducing a common language across ASEAN for financing sustainable economic activities.

United Overseas Bank (UOB), Southeast Asia's third-largest bank by assets, is tapping into megatrends in the region to drive its growth, positioning itself on capturing the rising ASEAN consumer spend and cross-border payments.