South-east Asia a rising star for cross-border deals: Poll

“The world is finally waking up to the vast potential of South-east Asian markets,” said Kuala Lumpur-based lawyer Munir Abdul Aziz.
APRIL 30, 2019 - 4:50 PM

SOUTH-EAST Asia is the top destination for mergers, acquisitions and investments in the next two years, according to a new poll of business leaders in the Asia-Pacific.

A cool 69 per cent of survey respondents said that their companies were likely to hunt for opportunities in Asean - outstripping the 59 per cent preference for domestic investments, and head and shoulders above South Asia, which came in third at 39 per cent.

Some 600 executives from Hong Kong, mainland China, Singapore, Japan, Malaysia, India and Australia were asked for their top three investment markets.

“This is not heavily weighted to a small number of jurisdictions,” said law firm Baker McKenzie in its report. “In every geography, business leaders are proving very interested in South-east Asia.”

Wong Ai Ai, the firm’s Asia-Pacific chair, pointed to projects such as Asean integration, China’s Belt and Road Initiative and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as proof of “governments and large corporates in Asia increasingly working hand in hand to further geopolitical goals through trade and investment”.

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Advantages in South-east Asia include the rise of a middle class that offers “an educated and increasingly sophisticated workforce and expanding base of consumers”, said the report.

The report also noted that respondents saw the region’s asset valuations as more reasonable.

The business strategy and development director of an unnamed Japanese consumer goods company reportedly called other regions “either too expensive or volatile for our requirements”.

Overall, 85 per cent of those polled said that South-east Asia would wield more economic influence in the Asia-Pacific in five years than it now does.

In the near term, the region is already benefiting from supply chain disruption in the trade war between the United States and China, the report noted - especially as Japanese firms turn to alternative markets for their goods and services, “to remain neutral in the feud”.

“The world is finally waking up to the vast potential of South-east Asian markets, given its significant demographic advantages over other regions,” said Munir Abdul Aziz, a partner in Wong & Partners’ corporate, commercial and securities practice Kuala Lumpur.

“Trade and investment continue to grow at an unprecedented pace and the business environment is becoming increasingly competitive as transnational corporations deepen their foothold in a market which is expected to become the fourth-largest economy in the world by 2030.”