By FARA AISYAH / Pic by ISMAIL CHE RUS
China’s growing dominance in the South-East Asian market, while opening more business oppoprtunities and growth in the region, can also be seen as a challenge that is being thrown at Asean members who are competing within the same economic domain.
The Asean Business Advisory Council (Asean-Bac) Malaysia chairman Tan Sri Dr Mohd Munir Abdul Majid said China’s investment and international trade may somehow affect the economic incorporation of the association, which is celebrating its 50th anniversary this year.
“The rise of China also has an impact in various ways which, while offering many opportunities, also throws up some challenges at the Asean integration script.
“Asean’s cohesion will be tested, as it has already been in particular circumstances,” he said in his opening remarks at the [email protected] Conference last Friday.
He also said that China is a large economy that is attractive to investors, exporters and importers, particularly for the Mekong sub-region.
The countries in that region — namely Cambodia, Laos, Myanmar, Vietnam and Thailand — have an average gross domestic product (GDP) growth of about 7%.
They are growing at faster rates than the other parts of Asean, which recorded an average GDP growth of about 5%.
Based on recent data from Kroll and Mergermarket, China was the top bidder jurisdiction from 2014 to the first-quarter of 2017 (1Q17), accounting for 19% of total inbound merger and acquisition (M&A) with 86 deals worth US$15.3 billion (RM65.46 billion).
However, by volume, Japan held the top seat with 182 deals worth US$11.8 billion.
The competition between Chinese and Japanese buyers could heat up as both countries seek to expand in Asean.
As for the region, Thailand was the top target jurisdiction for intraAsean M&A by value from 2014 to 1Q17 with US$10.3 billion from 38 deals. Indonesia came in first for volume and second for value as a target for intra-regional M&A from 2014 to 1Q17, with 76 deals worth US$8.1 billion.
Mohd Munir said that other than China’s penetration, the youth and digitisation are also Asean’s main concerns, which were raised during the conference.
“I propose a consultative Asean Youth Council be set up in that regard. We cannot talk about Asean’s future without talking about the youth,” he added.
There are also grave challenges to Asean economies thrown up by digitisation, which is not just about the opportunities of e-commerce.
He said that it is about the new economy, the digital economy, the future of jobs and employment, of education, training and retraining — the future of Asean itself.
Meanwhile, Bank Negara Malaysia deputy governor Abdul Rasheed Ghaffour said Malaysia will continue to galvanise all the segments of society — public, private and civil — to ensure Asean’s achievements are not just reflected on paper.
“In 2015, Asean contributed more than 7% to world exports. Our strong trade performance has contributed to an increase in employment — by about 70 million jobs — over the past 17 years,” he concluded.