Effect of Asean Economic Integration
ASEAN: The integration effect
Author: Tim Burroughs
Asian Venture Capital Journal | 12 Jul 2012 | 13:03
Tags: Asian development bank | Axiom asia private capital |Southeast asia
The Association of Southeast Asian Nations is gradually bringing the region’s economies closer together. Private equity investors stand to benefit but not all businesses are suited to cross-border expansion
The trouble-hit euro zone is hardly a poster child for regional economic integration, but it has yet to dent similar single-market efforts underway in Southeast Asia.
Although the Association of Southeast Asian Nations (ASEAN) has been around for 45 years, it is only in the last half decade that policies have been put in place to bring the 10 member economies closer together. Tariff barriers have been torn down, investment channels opened up and promises made to create a level commercial playing field for companies throughout the region.
The idea of an integrated Southeast Asian market is compelling. Taken as a single entity, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Myanmar, Cambodia, Laos and Vietnam are the world's ninth-largest economy, with a GDP of around $2 trillion. Annual economic growth is expected to be at least 5% through 2015. Their collective population is 600 million, larger than that of the EU.
If they buy into the ASEAN story, private equity firms looking for scale opportunities in Asia suddenly have an alternative to China and India. But do they buy into it? It comes down to assessing where the marketing campaign stops and reality begins. And establishing whether, even with the support of greater economic integration, private equity firms are able to build cross-border businesses within the region.
"Many PE firms look at the region from a country level but we look at how we can leverage this single market," says Karam Butalia, executive chairman of Southeast Asia-focused GP KV Asia. "When we invest in a company in Thailand, for example, we
Author: Tim Burroughs
Asian Venture Capital Journal | 12 Jul 2012 | 13:03
Tags: Asian development bank | Axiom asia private capital |Southeast asia
The Association of Southeast Asian Nations is gradually bringing the region’s economies closer together. Private equity investors stand to benefit but not all businesses are suited to cross-border expansion
The trouble-hit euro zone is hardly a poster child for regional economic integration, but it has yet to dent similar single-market efforts underway in Southeast Asia.
Although the Association of Southeast Asian Nations (ASEAN) has been around for 45 years, it is only in the last half decade that policies have been put in place to bring the 10 member economies closer together. Tariff barriers have been torn down, investment channels opened up and promises made to create a level commercial playing field for companies throughout the region.
The idea of an integrated Southeast Asian market is compelling. Taken as a single entity, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Myanmar, Cambodia, Laos and Vietnam are the world's ninth-largest economy, with a GDP of around $2 trillion. Annual economic growth is expected to be at least 5% through 2015. Their collective population is 600 million, larger than that of the EU.
If they buy into the ASEAN story, private equity firms looking for scale opportunities in Asia suddenly have an alternative to China and India. But do they buy into it? It comes down to assessing where the marketing campaign stops and reality begins. And establishing whether, even with the support of greater economic integration, private equity firms are able to build cross-border businesses within the region.
"Many PE firms look at the region from a country level but we look at how we can leverage this single market," says Karam Butalia, executive chairman of Southeast Asia-focused GP KV Asia. "When we invest in a company in Thailand, for example, we