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ASEAN Continues
Remarkable Trajectory
Toward Integration
S
IN PARTNERSHIP WITH
Since its founding in 1967, the geopolitical
and economic organization ASEAN, the
Association of Southeast Asian Nations, has
been on a remarkable trajectory. The region’s
10 member countries—Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and
Vietnam—represent one of the world’s
largest markets, with an economy valued at
$2.4 trillion and a growing middle class with
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rising purchasing power. Once the ASEAN
Economic Community (AEC) is implemented
in December 2015, the region will become
one of the biggest single market economies
in the world, ranking as the world’s seventh
largest economy and projected by McKinsey
to grow to fourth largest by 2050.
The U.S. is ASEAN’s third-largest trading partner—and growing. In 2012, the
U.S. exported $76 billion in goods and
more than $22 billion in services to the
region—up 78 percent since 2001.
“The AEC will create economies of
scale throughout the region that will let
ASEAN truly leverage its 620 millionstrong consumer market, substantially
expanding export opportunities for U.S.
companies,” says Alexander Feldman,
President and CEO of the US-ASEAN
Business Council.
JOHN LUND/GETTY IMAGES
ASEAN is already one of the world’s largest markets—and it’s on pace to
become one of the biggest single market economies come next year
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The ASEAN territory is also beneficial
to the U.S. in terms of job creation. Around
7 percent of U.S. jobs from exports are
supported by exports to ASEAN; more than
560,000 American jobs are directly or
indirectly supported by goods and services
exports to ASEAN.
Meanwhile, ASEAN is the top destination for U.S. FDI in Asia, at $190 billion
in 2012, up from $71 billion in 2001.
U.S. investment in ASEAN is larger than
that in the BRIC countries combined.
Even more impressive: ASEAN investment
in the U.S. rose to $27.5 billion in 2012.
Helping further drive trade efforts is
ASEAN’s strategic location in the center of
the dynamic Asia-Pacific region. Around
$5.3 trillion of global trade passes through
ASEAN waterways each year, of which
around $1.2 trillion is U.S. trade. ASEAN’s
free-trade agreements with Australia, New
Zealand, China, Japan, Korea and India
are helping the region become one of the
world’s fastest-growing markets. The U.S.ASEAN Trade and Investment Framework
Agreement, signed in 2006, has opened
additional doors to trade and commercial
opportunities.
Looking ahead, further opportunities
can be driven by the Trans-Pacific Partnership (TPP), a proposed free-trade agreement that includes four of the 10 ASEAN
members (Brunei, Malaysia, Singapore
and Vietnam). U.S. participation in the
TPP would be beneficial by spurring trade
growth and job creation.
“The TPP has the potential to be
another game-changer because it will be
a high-standards, 21st century free-trade
agreement, which can be a building block
for a free-trade area of the Asia-Pacific
region,” Feldman says.
ASEAN Economic Community
(AEC) Integration
In December 2015, the implementation of
the AEC will create one of the largest single
market economies in the world, with the
free flow of goods, services, investment,
capital and skilled labor throughout the
region. This integration will allow businesses to fully leverage an investment in
one ASEAN country across others.
Take infrastructure, for example. Over
$1 trillion of infrastructure investment
is needed in the region through 2020,
according to estimates from the Asian
Development Bank. Infrastructure projects,
including transportation systems and
broadband networks, will be completed
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GDP COMPARISONS
ASEAN’s GDP compares to
major economies
SOUTH
KOREA
$1.2t
CHINA
$8.9t
JAPAN
$5t
TAIWAN
$485b
INDIA
$1.8t
ASEAN
$2.4t
Indian Ocean
Malaysia
$312b
Thailand
$401b
Pacific Ocean
Singapore
$287b
Philippines
$272b
Vietnam
$170b
Indonesia
$867b
Myanmar
$59b
Brunei Darussalam
$17b
AUSTRALIA
$1.5t
Cambodia
$16b
LEGEND:
b - Billions
t - Trillions
Laos
$10b
in a more comprehensive way when
countries in the region are economically
connected. Public-private partnerships
offer foreign investors an ideal way to get
involved in the ASEAN market.
Meeting ASEAN’s energy demands
For PTT Public Company Ltd., a leader in
the exploration, production and transmission of petroleum and petrochemical
products, the appeal of AEC integration is
an opportunity to collaborate with businesses and governments on ways to meet
the region’s rising energy demand. Assuming that ASEAN’s GDP will grow by 4.6
percent a year on average between 2011
and 2035, PTT estimates that the region’s
energy demand will expand two and a
half times, which could easily cause an
increased reliance on oil imports, and reduce coal exports and a surplus of natural
gas. The ASEAN Centre for Energy (ACE)
similarly forecasts that between 2007 and
2030 the demand for oil will triple and
energy demand will increase by an average
annual growth rate of 4.4 percent—much
higher than the world’s average annual
energy demand growth rate of 1.8 percent.
ASEAN has developed a blueprint for
energy cooperation among member countries to enhance energy security and sustainability in the region. Expansive in scope, it
covers areas that include the ASEAN power
grid, gas pipelines, coal technology, energy
efficiency and renewable energy, among
others. PTT aims to develop policies that will
attract investment while enhancing energy
security, affordability and sustainability.
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PER CAPITA GDP
ASEAN’s per capita GDP falls between that of India and China
$3,852
ASEAN
Australia
$64,157
China
$6,569
India
$1,414
Japan
$39,321
South Korea
$23,838
Taiwan
$20,706
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
GDP GROWTH
ASEAN has been the second-fastest-growing economy in Asia
between 2001–2013
575%
600%
500%
400%
313%
300%
294%
257%
200%
137%
100%
100%
0
ASEAN Australia China
DATA: ASIA MATTERS FOR AMERICA
65%
57%
Taiwan
US
20%
EU
To meet this challenge, PTT is fostering
collaboration efforts between Thailand,
where the company is based, and the rest
of the ASEAN region, as well as negotiating
business opportunities. PTT is also exerting leadership by serving as secretary in
charge of the ASEAN Council on Petroleum
(ASCOPE), in an effort to help forge energy
security and sustainability in ASEAN.
PTT sees many opportunities in the
ASEAN region, especially given the political
stability and economic environment in
many of the countries that are part of
ASEAN. In Brunei, PTT aims to strengthen
its relationship with local producers
to capture crude oil export volume for
trading. PTT also sees an opportunity to
export petroleum products from Brunei
when a Zhejiang Hengyi Petrochemicals
India
Japan
Korea
refinery begins operation there in 2015.
Gas transmission pipelines and the
expansion of oil service stations are among
the opportunities in Cambodia, while coal
and oil represent sound growth prospects
in Indonesia. Looking to Malaysia, PTT
will conduct a feasibility study for oil
marketing and retail opportunities, as well
as rent fuel oil blending facilities to adjust
quality to complete the supply chain in fuel
oil trading. In Singapore, PTT will focus on
its trading business by expanding crude
oil and petrochemical products, and in
Vietnam, PTT’s trading opportunities from
a Vung Ro-based refinery remain a priority.
Given the vast differences between
the 10 ASEAN nations, substantial legal,
tax and regulatory knowledge is required
to conduct business effectively, and PTT
is making every effort to develop a good
understanding of regimes in each country.
As a sign of PTT’s commitment to the
region, the company established a regional
treasury center in Singapore last year, and
it is in the process of setting up offshore
finance and investment infrastructure as a
platform for PTT overseas investment.
Malaysia on the rise
Widely acknowledged as a country that
pursues pragmatic and business-friendly
policies, Malaysia keeps abreast of global
developments, while simultaneously fulfilling the aspirations of the nation.
Over the years, Malaysia’s trade relations have expanded and opened new
opportunities with various countries via bilateral and regional free-trade agreements,
especially with China. In addition, various
measures introduced by the government to
facilitate business have boosted Malaysia’s
business benchmark ratings. The 2014
World Bank Report ranked Malaysia the
sixth most business-friendly country in the
world, and the Institute for Management
Development (IMD) 2014 World Competitiveness Yearbook ranked Malaysia the
12th most competitive country.
Malaysia’s sterling performance in
these rankings reflects its achievements
and the government’s vision for the future.
Malaysia’s New Economic Model (NEM)
helps target and attract industries in which
Malaysia has strong foundations for new
growth areas, while the 10th Malaysia
Plan (10MP) outlines new approaches
and programs to be implemented between
2011 and 2015 to foster economic
productivity. Additional factors driving
Malaysia’s momentum include political
and economic stability, investor-friendly
business policies, a productive workforce
and sound infrastructure.
Malaysia is one of the strong contributors to ASEAN’s success, given that the
country is one of the world’s top locations
for offshore manufacturing and servicebased operations, with the presence of over
8,000 multinational corporations from more
than 80 countries. More foreign companies
are looking to Malaysia, and existing foreign
companies have continued to show their
confidence in the country as an investment
location through numerous expansions and
diversifications over the years, particularly
in high-technology projects.
Helping to drive these efforts is the
Malaysian Investment Development Authority (MIDA), which provides assistance to
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PTT Is Determined To
Create Sustainable Energy
To Meet ASEAN’s Needs
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DARIO PIGNATELLI/BLOOMBERG
A
As an influential thought leader in
well as conducting an in-depth feasiSoutheast Asia, PTT Public Company
bility study of gas-fired power plants.
Limited (PTT) is helping drive the
In the Philippines, PTT aims to
ASEAN region toward a bright future.
reposition its brand in the oil retail
When the ASEAN Economic Commarket with the integration of non-oil
munity is implemented in December
products, and expand sales into the
2015, it will create one of the largest
lubricant sector and the commercial
single market economies in the
market.
world. The 10 member countries—
PTT is excited about plans to deBrunei, Cambodia, Indonesia, Laos,
velop its exploration and production
Malaysia, Myanmar, the Philippines,
business in Cambodia, as well as its
Singapore, Thailand and Vietnam—
gas business. PTT aims to drive ophave highly attractive economic
erational excellence and to continue
and demographic trends, with a
expanding the number of service
combined $2.4 trillion economy and
stations in the country, and to build
population of 620 million.
brand awareness, as well. In PTT’s
This dynamic region is expected
trading business, the company will
to face an 80 percent rise in energy
supply liquid petroleum gas (LPG)
demand by 2035. As a leader in the
and petroleum products for domestic
exploration, production and transmisconsumption.
sion of petroleum and petrochemiIn Laos, where PTT has a strong
cal products, PTT, a state-owned
power plant presence, the company is
Thai petroleum and petrochemical
also focused on its oil business, drivcompany that has been in operation
ing excellence in existing operations,
for over 30 years, is poised to help
increasing commercial sales in the
solidify and enhance the region’s
industrial market and building new
energy security. PTT commands a
service stations across the country.
strong presence in the region and
PTT practices responsible corpoaround the world; the company ranks
rate citizenship by keeping in mind
81st on the Fortune 100 list of the
the communities in which it operates
ASEAN is expected to face an 80 percent
world’s largest corporations, and is
its business. The company has also
rise in energy demand by 2035. PTT
the only Thai company listed among
created a Sustainability Roadmap
commands a strong presence in the
the Fortune Global 500.
that aims to define how PTT will
region and around the world.
PTT sees numerous opportunities
approach sustainable development,
in ASEAN, and plans to contribute
create business growth and achieve
to the development of energy and
top performance in harmony with
petrochemical businesses across the region to help meet ASEAN’s
both society and the environment. To date, PTT has an impressive
energy demands. For example, Myanmar represents a significant
track record in meeting these objectives, and is listed on the Dow
investment opportunity for PTT. In exploration and production
Jones Sustainability World Index, a global sustainability benchmark
(E&P), PTT will continue with existing projects and participate in
that recognizes high-caliber sustainable business practices and
new bidding rounds in Myanmar, while in its gas business, the
alignment with a sound sustainability strategy.
company will continue to assess the integrity of its pipelines and
As a leader in the ASEAN region, PTT uses its leverage to
develop plans to utilize gas from the country’s M3 petroleum block. influence networks of investors, suppliers and contractors to adopt
PTT’s power, oil and trading businesses also remain a main focus,
sustainable practices, achieve systemic change and move toward
with objectives that include introducing modern petrol stations, as
the goal of a fair and sustainable world.
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companies wanting to invest in Malaysia’s
manufacturing and services industries. With
headquarters in Kuala Lumpur, MIDA has
a global network of 22 overseas offices that
cover Asia, Africa, Europe, the U.S. and
Australia, and aims to assist prospective
investors who are interested in establishing
manufacturing projects and services.
According to the CEO of MIDA, Dato’
Azman Mahmud, “MIDA is actively pursuing investments in new growth areas
and emerging technologies, R&D and
knowledge-intensive industries, among
other areas. Malaysia’s government recognizes the need to develop its high-tech
sectors as part of its strategy to sustain
the momentum of economic growth, and
improve the competitiveness and resilience
of the Malaysian economy. Malaysia aims
to raise productivity across the entire value
chain by encouraging companies to upgrade their workforces and embrace new
technologies—which are both essential
in order to meet Malaysia’s long-term
economic agenda.
“In 2013, Malaysia set a new record
of 216.5 billion ringgit for approved direct
investments in the manufacturing, services
and primary sectors. The investments were
made in 5,669 projects comprising 14
mega-projects worth more than 1 billion
ringgit each, and 82 large projects worth
more than 100 million ringgit each. These
investments reflect Malaysia’s ambition to
become a preferred destination for innovative, knowledge-intensive projects within
high-growth, high-value industries.”
A vibrant environment
According to MIDA, Malaysia has also created a vibrant environment for businesses
to develop niche growth areas within the
country’s biggest pillars of industrialization,
in which Malaysia has significant experience, such as expertise and infrastructure.
Notable projects that were approved in
2013 include: the Asia Center for Reliability & Efficiency (ACRE, an investment
expansion by oil and gas technology
supplier Schlumberger); the establishment
of Intel Malaysia’s global service center; a
new international supply chain center and
global headquarters for acoustic component
designer Knowles; and a new confectionary plant for Hershey Co. On infrastructure,
Malaysia’s drive to develop and upgrade
facilities has resulted in the nation becoming one of the most well-developed among
the newly industrializing countries of Asia.
Malaysia’s telecommunications networks,
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In 2013, Malaysia set a new record of 216.5 billion
ringgit for approved direct investments in the
manufacturing, services and primary sectors.
international airports, well-maintained
highways and international seaports make
the country an ideal springboard to the rest
of the Asia-Pacific market.
Malaysia’s financial leader
The expansion of ASEAN’s middle class
has increased the demand for dependable
financial services.
As Malaysia’s largest financial services
group and the fourth-largest banking group
in Southeast Asia, Maybank—which has
over 2,200 offices in 20 countries—plans
to broaden its leadership in ASEAN as the
region becomes a top global economic
competitor. Maybank has a foothold in all
10 ASEAN countries, but is especially well
positioned in Singapore, Indonesia, the
Philippines and Cambodia.
Maybank sees higher levels of trade and
growth as some of the benefits resulting
from AEC integration and the Trans-Pacific
Partnership. A rapidly growing middle class,
increased awareness of financial services,
improved levels of responsible lending
practices, wider pools of talent and shifts to
digital technologies are additional windfalls.
Maybank has long recognized the need
to demonstrate innovation and leadership
in its operations to compete effectively with
many of the world’s leading banks. The
company has programs in place to foster
employee entrepreneurship that include
an award that recognizes and promotes
innovation, via an online platform that
allows ideas to be submitted, shared and
considered for implementation. The top
six ideas chosen are featured through the
annual Maybank Innovation Showcase.
Through a focus on impact investments,
Maybank stands out among its competitors for putting a human face on financial
services, having won the “Sustainability
Report” category at the ASEAN 2014
Corporate Sustainability Summit. In 2013,
Maybank invested over 66 million ringgit to
help communities in the region. Coordinated
by the Maybank Foundation, the company’s
corporate responsibility initiatives cover community empowerment and the environment,
healthy living, education, the arts, culture
and heritage. For instance, Maybank Singapore helps low-income families by matching
their savings while encouraging financial
literacy; and subsidiary Bank Internasional
Indonesia’s microfinancing programs help
alleviate poverty for disadvantaged women.
In the years ahead, Maybank plans to continue expanding and deepening its involvement in ASEAN to support the sustainable
growth and development of communities in
the region. — Betsy Vereckey
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