62% of Asean region’s urban population to reside in cities by 2025

Close to two thirds of the Asean region’s urban population are expected to reside in cities and urban centers of under 500,000 by 2025, according to a new report from Nielsen.

The Nielsen report titled, The Age of ASEAN Cities: From Migrant Consumers to Megacities, which examines the influences that will shape development in the ASEAN region over the coming decade, identifies increasing business activity, cross-border trading and demographic shifts as some of the key forces driving population growth in ASEAN’s smaller cities, emerging towns and rural areas which are considered the ‘sleeping giants’ of the next decade.

While many consumers will continue to gravitate to mega and super cities in the next 10 years, the biggest population growth will occur in cities with populations between one million and five million. Across ASEAN, the combined population of these cities will increase by 51% between now and 2025, from 34.9 million to 52.6 million people.

The population in large towns and small cities of less than 500,000 will increase by 18% to 231.8 million which, when combined with the estimated 324.3 million rural population, will account for around 80% of the ASEAN population.

For marketers and brand managers, the smaller population centers throughout the region are important growth markets, with healthy demographics and an emergent middle class.

Nielsen Southeast Asia, North Asia and Pacific Regional Director, Client Services, Regan Leggett said looking beyond ASEAN’s megacities to understand future consumer ‘hotspots’ was the most powerful starting point in identifying emerging economic opportunities and the strategic approaches and segmentations needed to approach new markets.
Leggett cited Johor Bahru and Kota Kinabalu in Malaysia and Cebu in the Philippines as examples of regional cities with burgeoning potential.

“New consumption hotspots are emerging across Southeast Asia, such as clusters of industrial estates where manufacturers are leveraging cheaper land and labor,” notes Leggett. “This in turn is having a knock-on effect of attracting migrants and stimulating local economies.”

The Nielsen report also highlights the conditions which are prevalent in local areas, such as infrastructure and transport and access to technology and education, have a significant influence on consumer behavior and patterns.

As ASEAN’s smaller cities and rural areas continue to become more developed, their populations are increasingly well-educated, have higher levels of disposable income and are more aware of trends outside of their local marketplace.

“There are considerable rewards on offer across ASEAN’s rural populations as spending power increases,” said Leggett. “Many of these consumers are at the very beginning of their relationships with packaged and branded goods, and even a modest growth in spending power among such a large population equates to notable revenue potential.”

In order to tap into these markets brands should focus on product innovations which cater to the challenges, lifestyles and requirements of rural and small city consumers. Smaller product sizes or single-use portions appeal to shoppers with growing purchasing power and traditional trade retailers who are challenged with storage space.”

Leggett recommended five key actions for companies looking to leverage ASEAN’s up-and-coming rural areas and small towns. First, for companies looking to enter these markets for the first time, develop a strategy to identify and enter smaller secondary cities and rural areas within an appropriate timeframe. Identifying regional capitals as an entry point can provide an “early mover” advantage.

Second, develop innovation that is driven by the unique needs, challenges and lifestyles of rural and small city consumers rather than adjusting offerings generated primarily for big city consumers. Third, consider how e-commerce, distribution hubs and third parties might change the way you reach new consumers in new regions.

Fourth, generate differentiated innovation, marketing, sales and distribution strategies to create focused and successful consumer relationships and understand how existing efforts in primary cities may be adjusted in light of increasing time and space constraints, pollution, health and congestion issues that may be unique in high-density environments.

ILO urges Philippines to focus on more productive jobs

The International Labour Organization (ILO) has urged the Philippine government to focus more on decent and productive jobs in order to foster inclusive growth following the important gains in the labor market in recent years.

To support the creation of quality jobs and poverty reduction the ILO recommended that government should facilitate a greater role of investment, including through better infrastructure and channelling of remittances, main-streaming productive employment in policy efforts such as the industry roadmaps, investing in the development of relevant skills for the labour force, strengthening the social protection framework to mitigate the adjustment costs of the structural changes that the economic development of the country requires and enhance the labour market information system to ensure policy decisions are informed and coherent.

In its latest report, Philippine Employment Trends 2015, the ILO noted that the Philippine economy has experienced relatively high economic growth rates in recent years, reaching 7.2 per cent in 2013 and 6.1 per cent in 2014.

The report also highlights that vulnerable employment, a measure of the quality of employment, declined from 43.5 per cent in 2008 to 38.3 per cent in 2013. Likewise, poverty rate among all Filipino workers saw a modest decline to 21.9 per cent in 2012 from 22.9 per cent in 2006.

Employment in the Philippines rose to 38.1 million in 2013, a sizable increase of 4 million since 2008. The labour force also saw a faster growth since 2008 among women at 13.6 per cent compared to that of men at 10.1 per cent.

Amidst robust economic growth and positive trends in the labour market, the ILO also noted that the Philippines was hit by major disasters and crises which have disrupted the local economy and affected key industries.

“These natural disasters and crises destroy jobs, livelihoods and other sources of income, and often reverse recent achievements and progress made at the individual, community and national levels. To build back better, it is crucial to put decent work and livelihoods at the forefront of recovery after the disaster,” said Lawrence Jeff Johnson, Director of the ILO Country Office for the Philippines.

Youth unemployment rate declined slightly from 17.4 per cent in 2008 to 16.1 per cent in 2013. However, 1.4 million young people account for one-half of the total unemployed and are almost three times more likely than their adult counterparts to be unemployed.

The unemployment challenge is primarily a youth phenomenon, which includes those who are relatively educated in search of better options, the ILO report said.

Decent employment remains a top priority in both the Philippines’ and international development agenda. Full and productive employment and decent work for all currently is proposed as a post-2015 sustainable development goal by the United Nations.

The ILO report stresses that it is vital to ensure that growth translates into better labour market outcomes, including lower shares of vulnerable employment and working poverty.

“It is not the level of economic growth, but how we achieve growth with impact on people’s lives and the society” said Johnson.