Doing business in emerging ASEAN markets

Corporate leaders need to develop new capabilities and be much more in the ‘Asian century’ if their businesses are to succeed, warned top Indonesian leaders and academics from Jakarta and Australia at a book launch event.

Corporate leaders need to develop new capabilities and be much more in the ‘Asian century’ if their businesses are to succeed, warned top Indonesian leaders and academics from Jakarta and Australia at a book launch event.

Melbourne Business School professors Ian Williamson and Peter Verhezen hosted the event in Jakarta on October 19 together with co-editors and contributors to the new book:

• Natalia Soebagjo, Executive Director of University of Indonesia’s Center for the Study of Governance;
• Sudirman Said, former Minister of Energy and Mineral Resources; 
• Tanri Abeng, President Commissioner of PT Pertamina;
• Faisal Basri, Senior lecturer at the Faculty of Economics, University of Indonesia;
• Peter Chambers, Independent Commissioner of Axiata XL and
• Adi Rahman Adiwoso, CEO of Pasifik Satelit Nusantara

According to Professor Verhezen, leaders can prepare themselves for certain risks in the ASEAN market.

“Due to the rapid growth in Asian markets, along with mergers and acquisitions, leading global firms, once integral to Western-dominated technological prowess, now may have Asian or Middle East owners. This change in the global economy is putting pressure on leaders to become more in tune to this new powerful Asian economy,” said Professor Verhezen.

Professor Verhezen identified some key risks or challenges leaders should look out for.

“Weak legal institutions and bureaucratic red tape often results in institutional voids can make legal and judicial certainty a far-fetched dream for many global firms, and ethical leadership is sometimes challenged by outright coercive corruption that can arise when attempting to obtain legal licenses or to finalise deals in these growth markets,” said Professor Verhezen.  

“Weak governance structures and concentrated ownership can also make long-term foreign investment less straightforward, along with social and cultural misunderstandings and tensions that can threaten international trade and international business, and political nationalism that makes long-term policy less predictable.”

Indonesian Minister of Finance Sri Mulyani Indrawati, shared this sentiment in her foreward contribution to Doing Business in ASEAN Emerging Markets, explaining that good corporate governance is critical to improving the ability of boards, managers and owners to steer their companies through rapidly changing and volatile market conditions.

“Good corporate governance practices limit the ability of private sector companies to participate in corruption, establish an environment where companies find it more difficult to engage in questionable behaviour, help board members exercise better judgment, investors receive timely and relevant information, and put decision-making more into the open,” said Mulyani Indrawati.

“All countries will have to increase their efforts to build strong governance institutions and cultures, and the key to improving corporate governance will be to build a cadre of qualified, experienced and professional board members, managers and engaged owners, who understand the business case for corporate governance and have the tools to implement it.”

The book’s co-editor Professor Ian Williamson said, despite the risks, enormous opportunities exist across a wide range of industries in Indonesia and other ASEAN markets, including Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. 

“It is estimated that by 2050 almost half of the world’s biggest companies in terms of assets and revenues will be headquartered in other “emerging” markets, compared to 2000, when 95 per cent of Fortune 500 companies were headquartered in the developed world[1]. This represents unprecedented opportunity,” said Professor Williamson.

“What we’ve done in the book, and what we teach on our executive education programs with CEOs and senior leaders in Melbourne Business School’s Jakarta office, are the critical skills and capabilities that are needed to ensure that business growth is stimulated and sustained and that companies and their owners – be it families or states – are sensitive and hyper-aware of the socio-cultural and political contexts in the different markets in which they operate.”

Doing Business in ASEAN Emerging Markets is available via Palgrave Macmillan publishers online.

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