Diversity is key for ASEAN

Dato’ Sri Nazir Razak, Group Chief Executive, CIMB Group

In ASEAN, you will quickly find people who understand you and your business needs. The Region’s great track record in profiting from its diversity means that cross-cultural trade and investment are second nature. The Region’s 600 million people are playing a growing role in our inter-connected global economy.

The story of ASEAN’s future prospects needs a little perspective. There are ten member nations spread across Southeast Asia and we have a wide variety of government styles. At the last count, there were three constitutional monarchies, three republics, two communist states, one constitutional sultanate, and a former military junta in ASEAN. Our people practice several religions and speak over 70 languages and dialects. Whilst two in our number, Malaysia and Singapore are among the most multi-racial countries in the world.

ASEAN is staring to shine on the global stage because its unparalleled diversity means, its people are open to new ideas and can manage differences without resorting to conflict. Rapid economic growth and an abundance of natural resources across the Region, have also attracted significant investment. ASEAN’s people are also very hard working and have trade and cultural exchange embedded in their DNA by virtue of their geography.

Previously under the shadow of China and India, ASEAN has emerged as an increasingly attractive economic entity in its own right. The early Southeast Asian “Tiger Economies” of the nineties have expanded into a whole Region of increasingly integrated economic centres and collectively they recorded a combined nominal GDP of US$1.8 trillion in 2010.

ASEAN can offer a wide range of opportunities for investment and collaborations. We have already established different hubs in the Region. We have the “Detroit of Asia” in Rayong, Thailand, where nine out of the world’s ten largest automotive suppliers operate. Indonesia is the Region’s largest producer of natural gas and the world’s largest producer of palm oil and natural rubber. In Malaysia, we are the global centre for Islamic Finance and the Iskandar Malaysia corridor, on the border with Singapore, has the makings of a brand new urban and industrial cluster. We also have the new economic frontier of Myanmar, a country rich with natural resources, whose re-opening will link us even closer to China and India. In addition, there is great regional potential of the less developed countries, the Philippines, Vietnam, Cambodia, and Lao PDR.

What stands out is the Region’s ability to manage and leverage its diversity and to integrate outside investment and ideas. At CIMB Group, which is headquartered in Malaysia but active across nine out of ten ASEAN countries, we have adopted a multi-local business model, so our leaders in each market are predominantly locals, who are knowledgable and understand the markets they serve. CIMB Group has also created a strong sense of ownership and alignment to the whole Group’s interests to ensure efficient sharing of resources, knowledge and experience between different markets. We have found this business model to be most successful in the Region, as it enables us to cater for our diverse pool of customers, while still taking full advantage of regional economies of scale.

Apart from the attractions of business in ASEAN itself, there are strong cultural and geographical links to China and India. So, using the Region as a gateway to these two mega economies is an added strength. Business and investors can also consider ASEAN as a stepping stone to other parts of Asia, like the Middle East, to which Malaysia, Brunei, and Indonesia have strong connections via the network o Islamic countries.

Looking forward, ASEAN’s next step will be the creation of the ASEAN Economic Community (AEC) by 2015. This promotes regional integration through the free movement of goods, services, investments, skilled labour and the freer flow of capital. This will lead to a single market and production base in ASEAN and greater integration into the global economy. The AEC agenda will bring opportunities for new and existing businesses, to enjoy greater economies of scale and flows of trade, investment and people. There will also be tremendous opportunities in several large infrastructure projects as the ASEAN Connectivity Masterplan moves off the drawing board and into reality, with road, rail, power and shipping becoming more integrated across the Region.

Today, ASEAN is an oasis of growth in a changing and difficult world economic environment. Businesses and investors alike seeking to ride on wide growth prospects should give ASEAN some serious thought. To prosper in ASEAN, you should also understand and appreciate its diversity, and capitalise on this strength.

First published in Investing in ASEAN 2012-2013, Allurentis Limited