2011 Nov 04
November 4, 2011

AEC 2015: is Corporate Asean ready?

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Among major Asean member countries, internal dynamics are at play. Malaysian leaders are busy on overseas trips to lure foreign investors highlighting sustained investment in knowledge and skills; Indonesians – brimmed with democratic and liberalization progress – are putting domestic economy on a firm footing; the Philippines are starting to tie in to the regional supply chain to boost employment and growth; and major Thai corporations are advancing across the borders in greater force than ever before.

Is Asean Economic Community (AEC)  indeed poised to become a watershed in the advancement of the 10-member regional bloc as it takes effect in 2015? Not quite so, business leaders attending the CIMB Asean Conference 2011 here last week,  appeared to suggest. In fact, many of them did not hide their frustrations on the lack of more dynamic preparations and strategies which will sustain the regional integration over time.

But optimism persisted at least from the perspective of Indonesia, which has biggest population and economy  among the 10-Asean member countries. Patrick Walujo, CEO of Jakarta-based Northstar Pacific, said Indonesia’s ongoing vibrant democracy and economic liberalisation have together created a sense of “revival and optimism” to propel revaluation of “what’s in it for Indonesia (with Asean and AEC)”.

Such agenda was put on the backburner over the years due to internal turmoils. Walujo said overseas firms are now coming to Indonesia in big numbers attracted in part by its large domestic market. For Indomesian companies, the issue is not just about Asean but a broader support from them on further opening of the domestic market and liberalisation. It’s about how to make the stakeholders see the success through embracing opening and integration, he added.

Chew Gek Khim, executive chairman of Singapore-based Straits Trading Co, said despite being an opened economy, the city state may be too “western centric” and therefore have found it easier to do business with the West. “To push into Asean it’s like starting all over again….and learn how to do business.” But she said the crisis in the West today will make Singapore take a look at Asean.

Cezar Peralta Consing, partner at Rohatyn Group from the Philippines, said AEC will create winners and losers, and as with process of globalisation, how can losers compensate. He added that there are just a handful of companies expanding in Asean and respective supports from governments are needed.

The view was echoed by Nazir Razak, CIMB Group Chief Executive, who was fearful that losers from AEC could detail further Asean integration as they can “make more noises” and this is an agenda which Asean must start preparing. The business sector has a vital role to play as the success or failure of Asean integration will depend on them.

With this, Nazir has spearheaded the establishment of the Asean Business Club which was officially inaugurated last week in Kuala Lumpur. ABC will faciliate agenda and issues to present to Asean and member governments and to help companies in Asean to go cross borders and network with one another.

Nazir was wary of Asean bureaucracies and quoted Asean Secretary-General Dr Surin Pisuwan as saying “that he (SG) is more a ‘secretary’ than a general”. Nazir has also expressed a wish for Asean’s next chief to come from the private sector to help break the mindset and build AEC into a strong force. He also would like to see each government form an Asean ministry to make the commitment both “visible and real”.

The CIMB chief laid out a vision of AEC helping to build Asean as a global hub and promote Asean ownership of regional companies. For example, he said CIMB has been working to get listing on both Bangkok and Jakarta stock exchanges on top of the Kuala Lumpur listing. He would also welcome Temasak, an souvereign investment arm of Singapore, to hold shares in his bank although pricing remains an issue.

“We want to help create national interest in Asean,” he added, while saying that “we need to ask the hard questions about AEC 2015 now. Without preparation, Asean integration will be pushed back.”

At the CIMB Asean Conference 2011, the message from regional business leaders seem to be “AEC 2015 still lacks credibility among businesses”. –Business Desk, The Nation (Thailand)