New research from HSBC on Southeast Asia underscores once again the region’s leadership in trade, but uncovers a gap between Asian and European firms when it comes to taking advantage of its web of free trade agreements.

In its HSBC Navigator: Southeast Asia in Focus report, published this week, the bank surveyed more than 1,500 companies from China, France, Germany, India, the UK and the US, all of which have operations in the region.

It found that nine in 10 are looking to expand their footprint in the region, with 61% saying they expected to see organic growth of 20% or more over the next 12 months. This comes as countries in the region are expected to post solid growth rates this year, with the GDP of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam expected to increase by 3.8-6.2%.

“From demographics to digitisation to pure dynamism, so much is going in favour of Southeast Asia. The region is home to a large young population that is digitally native, increasingly affluent and educated, and with growing purchasing power. Their enterprising nature has produced a startup scene that rivals any other in the world,” says Amanda Murphy, head of commercial banking for South and Southeast Asia at HSBC.

In terms of priorities, companies polled put both digitisation and sustainability at the top of their agendas, with over 20% planning to invest more than 10% of their operating profit into improvements across these two areas.

“The pandemic has brought about a break from business-as-usual, and companies in Southeast Asia are urged to use it to recalibrate their strategies, to become more sustainable and to harness technology in realising their potential,” says Murphy.

However, while Southeast Asia is integral to two of the world’s largest free trade agreements (FTAs) – the Regional Comprehensive Economic Partnership (RCEP), which covers almost a third of the world’s population and 30% of global GDP, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – almost half of foreign companies surveyed by HSBC either are not aware of or do not intend to use them.

A closer look at the data reveals an awareness gap between Western and Asian firms of the trade facilitation measures that are on offer. While 94% of Chinese firms were aware of the RCEP pact, which includes China, Australia, Brunei, Cambodia, Japan, Laos, New Zealand, Singapore, Thailand and Vietnam, European firms demonstrated a much lower awareness of those deals that directly impact them.

A quarter of German firms and a fifth of French firms said they didn’t know about the EU-Vietnam trade deal, for example, and while their awareness of the more widely-publicised EU-Singapore pact was somewhat higher, still 17% of companies in both countries hadn’t heard of it.

Meanwhile, although the UK has formally applied to join CPTPP, 23% of UK businesses said they were not aware of it, with a further 29% saying they didn’t intend to use it.

“A better understanding of the various FTAs in play in Southeast Asia could only work to a company’s advantage,” says Murphy. “The flip side is a massive missed opportunity to ride the slipstream of this fast-growing region.”