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Asia Pacific – Companies Increasingly Approach ASEAN As One Market With A Single Business Strategy.

14 January, 2015


  • 97% of companies believe the ASEAN Economic Community will be formed
  • 76% have an ASEAN-orientated strategy and increasingly manage the region as one integrated economic bloc
  • Singapore remains the favoured ASEAN hub, where 80% of firms locate their regional head office
  • Indonesia and Myanmar were cited as the most preferred destinations for new factories over the next five years, followed by the Philippines and Vietnam


 A Baker & McKenzie report released today reveals that ASEAN integration is driving multinational companies to take a more pan-regional approach with their strategies, as business leaders are increasingly confident that the vision of the ASEAN Economic Community (AEC) will be achieved. 




“Re-drawing the ASEAN map”, based on a survey conducted by the Economist Intelligence Unit in late 2014 on behalf of Baker & McKenzie, asked 171 business leaders at large global multinationals for their views on the formation of AEC and how it is impacting their strategy. 97% of the surveyed companies believe the formation of the ASEAN Economic Community will be achieved. This contrasts with a 95% affirmation rate in a similar 2012 Baker & McKenzie report“Riding the ASEAN elephant: How business is responding to an unusual animal?” 

88% of the surveyed companies in this survey indicate ASEAN integration is important to their strategic planning (vs. 83% in 2012), and 76% have a strategy oriented around the ASEAN. The report highlights how more companies can be expected to expand their investment and footprint across the ASEAN in the near future as a result of the significant opportunities the region offers international investors, be it access to new markets and the rising middle class, or deeper talent pool. 


The region is home to nearly 10% of the world’s population (600+ million people) and currently ranks as the world’s seventh largest economy. It is poised to become the fifth largest economy by 2018, with an expected annual average growth rate of 5.6% between 2013 and 2018, surpassing mature economies such as the United States, the European Union and Japan. 

A Standard ASEAN Customer And Barriers To A Single Market Strategy

While ASEAN’s economies are still highly diverse, almost two-thirds of the business leaders (64%) say their customers are growing alike. “We realized that, if you look at the top cities across ASEAN, such as Kuala Lumpur, Singapore, Jakarta, Manila, Ho Chi Minh, Bangkok, there is a great degree of similarity,” said Vaiduanath Swamy, one of the 11 business leaders interviewed for the report, and CEO of N-Vision Consulting, a consultancy firm that specializes in Asian FMCG and M&A. 

In fact, 62% of the surveyed companies are standardizing their offerings across ASEAN. The disparate laws and business regulations were cited as the number one barrier to companies adopting a consistent approach to sales and marketing across the different ASEAN countries.


“Although challenges remain, there is no doubt that ASEAN will take center stage in 2015 as the world awaits with anticipation to see how far the region is able to move toward integration by year end. Businesses are clearly already taking advantage of the synergies that already exist in markets across the region,” said Bruce Hambrett, Baker & McKenzie’s Asia Pacific Regional Chairman.  


“What businesses are concerned with now is not whether ASEAN will succeed in creating an economic community, but how they can develop strategies, and what they need to do to mitigate the risks and capitalize on the opportunities that come with integration.”


ASEAN Integration Levels The Playing Field And Drives Investment

With barriers to regional trade coming down, companies can be expected to increase their manufacturing investment, fuelled by the need “to be more responsive to local demand,” rather than finding cheap labor.

The report highlights how Indonesia and Myanmar stand out as the countries where manufacturing investment will grow quickest, with the number of factories in Indonesia expected to rise by nearly 70% over the next five years. Vietnam and the Philippines are also poised to gain considerable manufacturing investment. Companies are also re-adjusting their manufacturing strategy, both consolidating their operations to reap economies of scale as well as fragmenting their value chains to put different parts of the manufacturing process in places where local cost structures and skills are most appropriate. Singapore continues to be the primary ASEAN hub, with 80% of companies (vs. 74% in 2012) selecting the city state as the base for their ASEAN head office.


“The impact of ASEAN integration will vary for domestic and foreign companies. ASEAN integration will level the playing field in the region, bringing new competition to domestic markets and new market entries for foreign companies. Domestic companies will need to reconsider their strategy and focus their resource allocation on expanding their ASEAN footprint or alternatively, expanding their market presence in other parts of the world,” said Eugene Lim, Head of Asia Pacific Trade and Commerce at Baker & McKenzie.


“Companies will also need to be adaptable to deal with the different rules, regulations and cultures, whilst ensuring proper safeguards are in place to remain compliant with business standards and ethics when operating in Southeast Asia.”


“Re-drawing the ASEAN map” is available at http://www.bakermckenzie.com/aec


About the Report

“Re-drawing the ASEAN map: How companies are crafting new strategies in South-east Asia” is based on a survey of 171 companies from a broad mix of industries, with no sector accounting for more than 12% of respondents. Respondents generally worked at large companies: 41% came from firms with revenue of more than USD 10bn, and 37% from firms with revenue of between USD 1bn and USD 10bn. 86% of the respondents came from non-ASEAN companies. Around 60% of the companies were primarily B2B, and 40% primarily B2C. Nearly half the companies (47%) did manufacturing in ASEAN. The report is sponsored by Baker & McKenzie and CIMB, and the research was conducted by the Economist Corporate Network, a division of the Economist Intelligence Unit.


Baker McKenzie



For further information, please contact:


Eugene Lim, Principal, Baker & McKenzie.Wong & Leow

[email protected]

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