The ASEAN Business and Investment Summit (ABIS) was recently held in Jakarta, alongside the 43rd ASEAN Summit. ABIS is the ASEAN Business Advisory Council (Asean-BAC)’s signature annual event. Over 3,500 participants convened in Indonesia’s capital, with the disappointed waitlist almost as long. There was an impressive list of speakers and panelists from Prime Ministers and thought leaders to corporate captains and even celebrities (a Korean actor and an Indonesian actress neither of whom I recognised but had crowds thronging around them for wefies). It was the biggest and busiest ABIS, and arguably the best ever.

As chair of ASEAN-BAC Malaysia, I dutifully attended but to be honest, my expectations were low. Over the years while building CIMB as a regional bank, ASEAN fell short of promises and disappointed me so many times. So it was to my surprise that I left Jakarta feeling re-energised and enthusiastic about ASEAN integration.

The organisation of the Summit and ABIS was first class; apparently having hosted G20 and B20 the Indonesians have this down pat. In the same week, audaciously, they also managed to host a whole slew of separate forums on women, youth, digital, and climate.  

At the apex of the organising team was ASEAN-BAC Indonesia which is mandated to KADIN, the Indonesian Chamber of Commerce. By legislation, all Indonesian companies and business associations are members of KADIN. KADIN has about 100 full-time staff and many more CEOs and business leaders who commit time and resources to Kadin’s activities. The Kadin model contrasts sharply with Malaysia’s highly fragmented corporate sector of hundreds of unconnected chambers and associations.

Of course structure isn’t enough; KADIN members also elected the indomitable Arshad Rasyid and his team to lead. Arshad, CEO of Indika Energy, is one of the most dynamic and personable CEOs I have ever met. As chair of ASEAN-BAC 2023 he deserves much credit for what I hope and believe will prove a watershed year for us.

ASEAN-BAC was set up in 2002 to be the principal private sector advisory body for ASEAN. That first year, its most memorable achievement was hosting a Miss ASEAN contest - which earned the wrath of then-Malaysian Trade Minister, Tan Sri Rafidah Aziz. It quickly became more serious but remained largely a sounding board for the ASEAN secretariat.

In recent years ASEAN-BAC has been invited for dialogues with ASEAN government leaders but these highly scripted meetings resulted in limited traction with its ideas and suggestions. It is symptomatic of this muted voice that the ASEAN Economic Community introduced in 2016 fell way short of the “single production base with free movement of goods, services and investments and freer movement of skilled labour and capital” promised in the ASEAN Charter of 2007.

Enter Arshad and team in January 2023. They immediately embarked on a roadshow to not only every ASEAN country but also to Japan, Australia, South Korea, Canada, China, USA and the UK to promote ASEAN while garnering ideas and inputs for their chairmanship. Resulting projects launched included the ASEAN single QR code, ASEAN Net Zero Hub, ASEAN Wikipreneur and ASEAN Business Entity (ABE).

Upon implementation, we will see tangible and significant benefits in bringing our economies closer. ABE for instance, aims to see regional companies qualify for preferential foreign ownership limits, and easier movement of talent and outsourcing of operations. This will make regional business models more compelling for our companies.

It is crucial for Asean that it is led, formally or informally, by its largest country. Indonesia makes up 41% of the ASEAN population and 39% of its GDP. It is a member of G20 in its own right. In his first term, President Jokowi appeared ambivalent about ASEAN, focusing mainly on domestic issues. That has certainly changed and I hope, irreversibly, for Indonesia, which will install a new President next year. Judging by the candidates for President I do think we will see continuity as the winner will surely be one that is endorsed by the incredibly popular incumbent.

The stars seem to be aligning for ASEAN in other ways too. I don’t recall any other time when every ASEAN country could boast political leadership certainty. Most recently, Thailand resolved its prime ministership impasse, the Cambodian prime ministership peacefully transitioned for the first time in 38 years and the recent state elections in Malaysia reaffirmed the solidity of the unity government.

Geopolitics is also favouring ASEAN with the US-China rivalry diverting FDI to neutral ASEAN. In 2022 FDI to the region hit a record of $224.2BN or 17% of global FDI. And the redrawing of the global supply chain map is just beginning.

At the moment intra-ASEAN FDI and trade remain at 12% and 22% of their total. These numbers are way below potential; intra-European Union trade hovers at 60% of total trade. In addition to various initiatives to boost intra ASEAN trade and investment, our economies are also set to benefit from RCEP, the world’s largest trade pact spearheaded by ASEAN. ASEAN GDP growth is forecast at 4.6% this year already making it the world’s fastest growing regional economy. But if we manage to harness the potential of ASEAN we would do even better.

At the ASEAN Economic Ministers meeting in Semarang, two weeks before the 43rd ASEAN Summit, the ASEAN Incorporated concept was introduced by ASEAN-BAC. The idea, which was endorsed by the ministers, is for the private sector to play a bigger role in driving economic initiatives and policy-making in ASEAN. Malaysians will remember the boost that our economy received in the 1980s when Malaysia Inc. was established largely because the private sector could translate their motivation to better align policies and incentives with what business really needs. ASEAN integration has historically been retarded because much policy-making was largely top-down; I have mentioned ad nauseam in the past about the critical importance of greater and more genuine private sector engagement hence why I think this might be a game changing moment for ASEAN.

If ASEAN-BAC is really allowed to be a co-driver of ASEAN integration and can drive initiatives and policy changes most relevant for business in ASEAN then original AEC promise land just might be realised in the not too distant future. At a time when the more commonly heard economic terms are the likes of “de-coupling”, “de-globalisation” and “de-risking”, ASEAN would prove to be a standard bearer for successful regionalism.

I am bullish on ASEAN again. Thank you Indonesia. You have set a high bar for Laos next year and Malaysia in 2025.

Nazir Razak

Chairman

ASEAN-BAC Malaysia

‍