KUALA LUMPUR: Malaysia’s entrepreneurs have proven their potential, especially in banking, oil and gas and aviation, and should now look beyond geopolitical boundaries to expand their growth potential, says HSBC Bank.
Malaysians should be made aware of the significance of Asean economic integration and how Malaysian businesses and public benefit from the integration.
HSBC Malaysia head of commercial banking Mahbub Ur Rahman said the Asean Economic Community (AEC), the single market and production base, marks a milestone in a project which looks set to deliver a new round of growth and opportunities for regional and international investors.
An economically unified Asean will represent a market of 640 million people with a combined GDP of US$2.4 trillion; if it were a nation, it would already be the world’s seventh largest economy, 25 per cent larger than India.
McKinsey and Company forecasts that the number of middle-class households in the region will more than double to 163 million between now and 2030.
“But even if the AEC will not be perfect and fully formed, its establishment will mark a milestone by underlining its’ members commitment walking a one-way path to greater integration.”
The region’s diversity is a challenge but it is also an unmatched opportunity for self-sustaining growth: there are resource suppliers and resource consumers; high-value added producers making the goods that high-volume low-margin producers want.
“But to achieve this, Asean needs to maintain the momentum towards integration.
“The final steps to a common market will be the hardest because they will have the most impact on domestic interests, but they will also be the most important if the region is to fulfil its aims of sustainable and equitable growth.”
Rahman said there are three interlinked priorities, namely trade connectivity, financial connectivity and physical connectivity.
“Much of Asia’s new growth, particularly in middle-income countries like Thailand and Malaysia, is going to come from the services sector and progress will be both faster and more stable if it can draw on a regional rather than a national talent pool.”
When it comes to financial services, frictionless cross-border banking will facilitate the growth of supply chains, both in terms of geographic breadth and skills depth, and will allow the pooling of assets for vital investments in the next phase of growth.
He said without significantly greater investment in the physical hardware of connectivity – the roads, railways and ports that make trade possible – and the financial architecture to pay for it, the dream of a self-sustaining Asean economic powerhouse will never be fully realised.
Asean, he said, needs deeper, better connected and more efficient local debt and equity capital markets to transform its savings into investment for its next phase of growth, and it needs a harmonised regulatory system to protect both lenders and borrowers.