Venturing and Expanding Into ASEAN Economic Community By Dato Sri Hj Syed Zainal Abidin Syed Mohamed Tahir 8 March 2015
TABLE OF CONTENT AEC 2015 BENEFITS OF AEC HOW TO TAKE ADVANTAGE OF AEC BUILDING PRESENCE DEVELOPING SUSTAINABLE BUSINESS MODEL POTENTIAL CHALLENGES HOW MALAYSIAN COMPANIES PREPARE FOR AEC 2
AEC 2015 OBJECTIVES: Reducing development gap among ASEAN Member States (3 tiers of ASEAN nations) Promoting equitable and sustainable economic growth Enhancing connectivity to establish a highly integrated ASEAN 3
BENEFITS OF AEC Connected to trading partners through Preferential Trading Agreements Market size of 3.5 billion 48% of world population (7.3 billion) ASEAN+INDIA (1.84 BILLION POPULATION) ASEAN (620 MILLION POPULATION) ASEAN+ CHINA (1.97 Billion POPULATION) ASEAN+KOREA (670 MILLION POPULATION) ASEAN+ AUSTRALIA-NEW ZEALAND (645 MILLION POPULATION) ASEAN+JAPAN (745 MILLION POPULATION) 4
LIBERIZATION OF SERVICES SECTOR 12 Broad Sectors 128 Sub-Sectors Business Educational Tourism and Travel Related Communication Construction and Related Engineering Environmental Financial Recreational, Cultural and Sporting Transport Distribution Health Related and Social Other 5
ASEAN ECONOMIC INTEGRATION 10 ASEAN countries with a Single Duty Free Market (20 times of Malaysia) Vibrant Region with Increasing Middle Class Population Manufacturing and Investment Base to Export Worldwide Rich in Natural Resources and Human Capital Indicators (2012) Malaysia ASEAN Market Size 30 million 617 million Total Trade US$424 billion US$2.4 trillion GDP US$305 billion US$2.3 trillion GDP Growth 5.1% 5.7% 6
ASEAN+1 FTAs AFTA ASEAN-China FTA ASEAN-Korea FTA ASEAN-Japan CEP ASEAN- India FTA ASEAN- Australia-New Zealand FTA Entry into force 1993 2005 2007 2008 2010 2010 Market size (million) Econ size (US$ trillion) Coverage Duty phase out date (A6+DP/CLMV) ROO Total trade (US$, billion) 599 1,939 647 726 1,814 625 1.9 7.7 2.9 7.3 3.4 3.2 Goods Investment 2010/ 2015 (2018) 40% or CTH PSRs Goods Investment 2012 2018 40% Limited PSRs Goods Investment 2012 2018 (V) 2020 (CLM) 40% or CTH PSRs Goods (services & investment in bilateral EPAs) 10-15 years from EIF 2026 (CLM) 40% or CTH PSRs Goods 2017 2020 (P) 2022 (CLMV) 35%+CTSH Goods Investment, etc. 2020 2022 (V) 2025 (ICLMV) 40% or CTH PSRs 519.8 751.8 618.4 726.4 575.2 582.6 7
BENEFITS OF AEC Bigger market and ability to get scale Knowledge of each market will strengthen the company Financial reward Foster network and export from ASEAN Cultural and language integration Improve RND and products for other markets 8
WHAT WOULD BE ACHIEVED IN 2015 Substantial Liberalization of Sub-Sectors Comprehensive, Open and Transparent Investment Regime Improved Logistical Connectivity, Encompassing Transport, Facilitation in Movement of Goods and Open Skies Trade Facilitation through Improved Customs Clearance Procedure and ASEAN Single Window Implementation of Self-Certification Scheme for Preferential Trade Enhanced Cooperation in the Areas of Consumer Protection, IPR and Competition Policy Creation of Highly Integrated ASEAN Vision for Post-2015 Economic Integration 9
HOW TO TAKE ADVANTAGE OF AEC Understand country regulations and market requirements Need to know the investment regulations Understand about the product registration Understand the market requirements Must know the profile of customers 10
NEED TO BUILD PRESENCE 1. Regular visit to the country and meet potential partners and regulators 2. Identify potential partner that has: Knowledge of business and experience Financial strength Professional in business approach that has market presence or network Good relationship with the government 11
DEVELOP A SUSTAINABLE BUSINESS MODEL Decide type of venture i.e. JVC or licencing Develop a business plan with partner Always have equitable profit sharing Have your own people on the ground Have good financial and performance tracking 12
POTENTIAL CHALLENGES 1. Communication 2. Difference in business philosophy 3. Profit Sharing 4. Product acceptance 5. Governmental approval and registration 6. Tax barriers and computations 13
HOW DOES MALAYSIAN COMPANIES PREPARE FOR AEC 1. Invest in Human Capital 2. Build network 3. Work closely with related government agencies 4. Strengthen Financial and processes 5. Invest in RND and innovation 6. Strengthen branding and marketing 14
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