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It’s time to rethink your Asean plan

Sushil Saluja,Chairman of TheCityUK’s ASEAN Market Advisory Group, and a senior managing director in Accenture’s Financial Services group | Sept. 23, 2015
According to Sushil Saluja, the AEC represents an enormous opportunity, and those who support the rising middle class, burgeoning SME sector and PPP projects will win the hearts (and financing opportunities) of a growing market.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

When I was head of Accenture's Asia-Pacific financial services business, a non-stop travel-the-region role, it became obvious to me that Southeast Asia was a growth market. All one had to do was look at the number of Japanese companies investing in their backyard market.

Consider that Sumitomo Mitsui Financial bought 15 percent of Eximbank's stakes back in 2007, and Mizuho, also a Japanese group, bought 15 percent of Vietcombank's stakes in 2011 - at the time both were the limit foreign companies could purchase in Vietnamese financial institutions. Then in 2012, when that market opened up further, Tokyo Mitsubishi UFJ Financial Group purchased 20 percent of Vietinbank and a year later the group bought a controlling stake in one of Thailand's largest lenders, Bank of Ayudhya.

But it wasn't just Japanese banks investing in regional banks. Most Japanese firms also increased their M&A teams in the region in the past five years so as to support their nation's corporates who were also on buying sprees.

Now that I am back in the UK, I am encouraging British companies to look toward the Association of Southeast Asian Nations (ASEAN). I am not alone in pointing out the potential. During David Cameron's 10-country ASEAN region visit in July the British prime minister noted that Britain does more business with Belgium alone than with Indonesia, Malaysia, Singapore and Vietnam combined. His aim was clearly to readjust that metric.

For many in the region the potential is obvious, yet bears repeating. With 620 million people, ASEAN has the world's third largest consumer base and within five years aggregate gross domestic product is projected to rise by more than one-third to US$3.4 trillion. That is bigger than India's GDP. While China invariably dominates the conversation when it comes to trade with and investment in Asia, given that all eyes are now focused on the rise and fall of the renminbi and the nation's newly volatile stock market, it is clear that some investors are looking for a hedge. ASEAN fits the bill.

Obviously the creation of the ASEAN Economic Community (AEC), a common economic market for the 10 ASEAN countries by the end of 2015, is another reason to consider investing in the region. Given it is expected to allow freer flow of capital and aims to have a semi-integrated financial market by 2020 (plus more immediate free flow of goods, services, investment and skilled labour) it makes the region a more cohesive investment opportunity.

WHAT ARE THE OPPORTUNITIES?


Source: Accenture "ASEAN Economic Community (AEC) implications and opportunities for UK financial and related professional services" for TheCityUK's ASEAN Market Advisory Group.

 

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