It's a region that's changing, growing and speeding towards the next phase. And that environment forms the basis for discussions at this year's Asian Legal Business (ALB) In-House Legal Summits.
It's a region where half of the population is under the age
of 30; one where inequality is a big trend, yet economic growth is
booming. The nations of the ASEAN Economic Community are even
looking to the European Union, trying to find ways to cooperate on
political and economic projects.
The "ASEAN 5" – Indonesia, Malaysia, the Philippines, Thailand and Vietnam – will exceed economic growth
rates of 5% for the next decade, largely driven by a young and
mobile population that's tapped in to a global world delivered
direct to their smartphones.
Yes, it's a region that's changing, growing and speeding
towards the next phase. And that environment forms the basis for
discussions at this year's Asian Legal Business (ALB) In-House Legal
Summits, currently being held across Asia.
Discussing the scope of enterprise risk oversight, changing
corporate governance needs and a revolution in legal and compliance
across South East Asia (SEA) are in-house legal counsels, legal
practitioners and compliance industry experts, including
representatives from TMF Group's local offices.
"SEA is growing fast and opportunities are everywhere,"
says Albert Porta, Associate Director of Global Business
Development. "There is a fair bit of uncertainty as well, but
all countries are moving forward, albeit at different paces.
"There is a sense of general growth and optimism. I'm
curious to see how developing economies will reshape themselves to
grasp synergies rather than directly competing against each
other."
Those sought-after synergies drive talk of economic union across
ASEAN, but that's something Mr Porta doesn't see happening
soon: "Regulatory gaps make an economic union seem far at the
moment. Infrastructure varies from one country to another; the gap
is sizeable. There's a long way to go but I believe that
governments are realising that loosening protectionism will benefit
them."
Mergers and acquisitions driving global growth
For the most part, it's M&A work that's forcing
rapid change in these once-lagging economies.
"When it comes to M&A, Philippines is a tiger economy in
Asia now," says TMF Philippines Managing Director Sharon Yam,
who represented the company at the ALB Philippines
summit.
"The current Philippines president, Rodrigo Duterte, is
actively participating in roadshows in different countries, meeting
Filipinos and fostering trade relationships. Philippines is also
chairing ASEAN this year; with this heightened profile, there are
many countries interested to invest in the country, while it also
looks outward to expand internationally.
"ASEAN countries are opening up and becoming more
international. There is lots of optimism in the Philippines economy
and collaboration with ASEAN countries will further increase that
growth. Philippine companies are getting ready to compete globally
and are keen to bring global players into the
Philippines."
Ms Yam says this outlook brings a growing trend of M&A, both
local and cross-border, as well as a growing awareness and the need
for corporate compliance.
"Change is on the horizon," she says. "Philippine
companies are expanding out of the country and going regional and
global. They are buying and investing in international brands and
bringing them to the Philippines. Many international companies are
also expanding into the Philippines to take advantage of its robust
and growing economy. As such, there is more focus on compliance and
governance, and we expect more transparency and more
collaboration."
Consistent global reporting needs behind move from local to global compliance partners
On the other side of the region, TMF Thailand's Managing
Director Tom Leenders moderated a discussion on cross-border
M&A transactions at the ALB Thailand Summit. He heard about the
caveats and on-the-ground experiences of the C-level when expanding
operations in multiple countries, and found there's an
increasing demand for cross-border compliance reporting,
multijurisdictional consolidated FATCA, transfer pricing reports,
and more.
"Handling operations per country in silo sourcing local
vendors has always been a way to reduce costs, although risking
disparities in communication and quality of service delivery,"
says Mr Leenders. "Now we are seeing multinationals jumping
the price gap from local to international firms to ensure
consistent reporting to an increasing regulator's pressure on
their HQ.
"At a local level with the move to Thailand 4.0 and a more
value-based economy, we see the likes of India, China and Indonesia
pushing to implement online filings, and so there is an increasing
demand for ERP interfacing and on-demand web-based reporting.
"There are recurring concerns from professionals in the
industry. We see the same roadblocks tend to come up as pressure
points when expanding and operating in the international compliance
space."
So what can we learn from the state of compliance in ASEAN markets?
Simply put, nothing is stationary. There is a move towards greater
integration, and there is a move towards digitising compliance
processes. This adds up to an ever-changing market where falling
behind in compliance can cost you greatly. Ambitious companies
should make the most of the vast opportunities presented by ASEAN,
but ensure they work with a global compliance partner that has
niche local knowledge to keep things moving.
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