KUALA LUMPUR: Malaysian companies believe that they will have the most to gain from the Asean Economic Community (AEC) that will be commencing in 2015, according to a recent survey conducted by the Boston Consulting Group (BCG).

BCG Southeast Asia managing partner Vincent Chin said among the Asean countries surveyed in its Asean economic integration survey, Malaysia is the most optimistic about opportunities in the Asean region, with 90% of its corporate executives indicating so.

“Malaysian companies feel they have the most to gain from the AEC. They recognise the need to go overseas and therefore, see it as a godsend. The Malaysian market is already too small for the likes of companies such as CIMB [Group Holdings Bhd] and Maybank [Malayan Banking Bhd],” said Chin in an interview with The Edge Financial Daily during the week prior to Sept 01.

“More than half of them also reported that they’ve done quite well in the past three years, and have increased [their] market share in Asean.
“Moving forward, companies are even more bullish about the opportunities in Asean, with a good 75% expecting to increase their market share,” he said.

BCG polled over 237 business leaders and government officials across Southeast Asia in the survey, with the bulk of the participants coming from Singapore, Malaysia, Indonesia, Thailand and Vietnam.

They came from sectors such as financial services, industrial goods, consumer, telecommunications and energy. The participating companies ranged from turnover of less than US$500 million (RM1.58 billion) to more than US$5 billion.

On which industries would benefit the most from the AEC economic integration, Chin thinks it would be the less regulated ones, such as retail.

But the biggest winner would undoubtedly be multinational corporations (MNCs), while domestic small and medium enterprises (SMEs) may lose out, as they are less equipped to compete on salary and training programmes that offer developmental opportunities, he added.

This, he noted, is where governments can intervene by offering grants and mechanisation vouchers to keep SMEs in the game.

The AEC is to be launched in end-2015 and aims to ensure that there is freedom of movement for goods, services and capital across Asean, through the removal of duty and barriers.

Chin compared the Asean economy to that of Western Europe’s, which similarly has a population base of 600 million.

To prepare for this economic integration, he said, there are some key challenges that Asean countries need to address. These include adapting to various market requirements, dealing with differing forms of governments, and sourcing and nurturing scarce talent.

“Talents are scarce, because the education systems in these countries are not world class and individuals who are brilliant are poached by MNCs. Talents are not well developed in Asean countries, and the global market for talents is very fluid,” he said.

Chin cited Air Asia Bhd as a company that has managed to adapt to the economic integration requirements of the AEC.

“Air Asia is one that has demonstrated expertise in navigating regulation considerations. [Tan Sri] Tony Fernandez and his team have created a regional company by using locals to ensure that nationalised interests are secured, while managing the company as a whole, on a regional basis.

“It is an example of a company that really knows how to play the game,” Chin said.

Moving forward, he is positive about the prospect of the AEC as an economic integration, revealing the strongest aspects of our economy, even as it shows us our weakest ones.

This article first appeared in The Edge Financial Daily, on Sept 02, 2014.