Asean has become a 2-tier market, business forum told

Speaking at the Nikkei Asia300 Global Business Forum in a session on “Assessment of Asean’s Impacts”, Chartsiri Sophonpanich, president of Bangkok Bank, said the Asean market was being driven by two tiers.
One is the developed countries, which can be the region’s door to India and China, and the second tier is the developing CLMV countries, where growth may not be high but it is stable.
Gross domestic product in CLMV last year grew by 6.5-6.8 per cent.
What is interesting in CLMV is the infrastructure development, which provides opportunities for investors, Chartsiri said.
Demand for infrastructure projects is expected to be valued at about US$8 trillion over the next 10 years, and the low interest rates benefit investors and enhance cash flows in the CLMV countries.
Another opportunity that arises from the infrastructure investment in CLMV is the two-tier structure in Asean. A manufacturing source in one country is able to support another country with the potential for developing a regional supply chain, he said.
He said the growth of Asean had created several multinational companies, which not only have footholds in the region but have also expanded beyond it. In this regard, Chartsiri pointed to AirAsia of Malaysia and Charoen Pokphand and Central Group of Thailand as outstanding multinational companies.
Mohd Munir Abdul Majid, president of Asean Business Club (Malaysia), said the governments of the 10 Asean member states had spent much time discussing how to implement the same regulations evenly in every country in the region.
He said Asean should discuss the urgency of increasing competitiveness of certain industries, including retail, logistics, agriculture and healthcare.
To make the integration of Asean effective, those countries that are well prepared to take initiatives should be encouraged to do so, setting the example for other countries to follow. “This way is better than telling each country [what] to do,” he said.
An example of this is a Malaysian company that has developed an e-finance platform for peer-to-peer lending for small and medium-sized enterprises. It has shown the way that other companies in other Asean states could follow, he said.
In his view, the developing economies of Asean should be divided into two subregions. One is CLMT (Cambodia, Laos, Myanmar and Thailand), which have linkages with China, and the second is maritime countries such as Vietnam, Indonesia and Malaysia.
Thailand plays a key role in the Greater Mekong Subregion, he said, praising the expansion of Thai banks and retailers.
Truong Gia Binh, chairman of FPT, a Vietnamese technology solution provider, said Asean integration was very young, as the Asean Economic Community was established only 10 months ago.
The elimination of tariffs from the integration benefits giant companies, but free trade is a challenge to SMEs. Governments therefore must have a policy to support local SMEs.
Moreover, the digital revolution is challenging enterprises in Asean on how to prepare and how to survive amid rapid technological change.