Someone once said that if you visit China for a week you can write a book on the subject, if you stay a month you can write a short article, but if you stay a year you will have nothing to say.

Well, I have just spent a week in Malaysia and Indonesia, so I am qualified to write at least a short blog on my reflections.

I flew between Kuala Lumpur and Jakarta on Air Asia, Asean’s low cost airline. The first impression is the huge throng of humanity that passes through the cargo terminal at KL where Air Asia has its base. This is something of a scrum although you can get a seat. The second is that once you are on board the service is really very similar to Easy Jet and Ryanair, but if you stick to the basics, a fraction of the cost. Then there is the logo, “now everyone can fly”. And they are doing. Air Asia has tapped into a massive market because of the low cost of their operation and the growing affluence of this group in SE Asia.

I met a number of senior banks in both KL and Jakarta. In Indonesia they have 80 million people without a bank account, but they can transfer money by mobile phone. We are talking about amounts that in the West we would probably consider change, but everyone has a mobile phone and the cumulative amounts being transacted are significant. Again this is an emerging population group containing millions of people who are becoming more affluent but to Western companies would seem so economically insignificant as to be under the radar as a viable market segment.

However, they are a viable market segment and companies such as Tune Group (the owners of Air Asia) are looking to capitalise on this opportunity. They are starting to build their presence and customer loyalty in a customer base that will, over time, have very significant spending power – because of their numbers and growing affluence. If they can maintain that loyalty they will have a significant first mover advantage which Western companies will find hard to respond to.

Mike Bourne

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