Southeast Asia & Canada: Vibrant Economies & Power Shifts

“Doing Business in ASEAN”

November 25 2014University of Ottawa Canada

Manfred G von Nostitz

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BASIC ASEAN INDICATORS

ASEAN GROWTH RATES

CONSUMER MARKET RANKING

THE ASEAN WAY

•ASEAN comprised of committees and groups- No imperious EU type commission•Secretariat/Bureaucracy thin by design •ASEAN managed by relationship diplomacy•Personal connections count not institutions

ASEAN ECONOMIC COMMUNITY (AEC)

• 2015- Economic Integration

• Elimination of tariffs

• Harmonizing of Regulations

• Establishment of Capital Market

• Key country- Malaysia as ASEAN Chair

ASEAN IN MIDDLE OF POWER SHIFT

• ASEAN tightly connected to both countries ---- the interface between China and USA

• Brought Burma into fold to anchor western flank of ASEAN

• ASEAN a main player in shaping Pacific trade and security architecture

• Canada needs to strengthen its Dialogue Partner seat at the ASEAN Table

Canada/ASEAN: Historic Context

• Canada - Benign neglect of ASEAN since 1998 with overdue re-awakening in 2013

• ASEAN: From Trudeau 1982 engagement to Harper 2013 re-engagement

• Appointing Canadian ambassadors to Burma and ASEAN - Good moves- only if resourced properly

• While Canadian uptick on ASEAN front welcome- Canada needs to broaden relations to be more effective

Adverse Decision-Making by Ottawa

• Ottawa’s emphasis on increasing business with ASEAN impaired by ill-advised decisions . Examples:

• Closing down Visa office in KL while maintaining visa requirements- a costly mistake for Canada and an insulting irritant for Malaysians

• Selling ORs- Divesting Canada of an important political and commercial asset

• Muzzling Canadian HOMS from public promotion of Canada/ASEAN issues

• A hassle for Canadians: Eliminating Business Passports & failing to provide Canadian businessmen with APEC travel cards

Disengagement Consequences

• Canada has a challenge to shake off its current reputation of a fickle fair-weather friend

• We have lost a lot of ground vis a vis other Dialogue partners --especially Australia due to our long disengagement approach

• We don't want to hear any longer the mantra in ASEAN: What happened to Canada? Where is Canada?

• Inter-governmental relations important backbone for Canadian business. Must be stepped up much more.

Risk Assessment: International Security

• Zero chance of intra-ASEAN armed conflict• China will continue to bully the maritime

ASEANs- but peaceful free-flowing transit across the region remains of primordial importance

• For similar reasons: China's testing of US resolve in the ASEAN region will remain contained

• Strategic rebalancing of China/USA influence will not adversely affect Canada's security or business interests relationships with ASEAN

EASE OF DOING BUSINESS: WORLD BANK

DOING BUSINESS IN ASEAN (I)

• Democracy- Patchy but on upswing in Burma and being restructured in Thailand

• Finance/Banking/Corporate Governance: Measure up to global standard- except for Vietnam, Cambodia, Laos and Burma

• Language- English lingua franca- big advantage for ASEAN

• Communication- Cultural differences of indirectness always a challenge to Canadians

DOING BUSINESS IN ASEAN (II) • Xenophobia – Absent except for a tinge in Indonesia• Economic Nationalism- Indonesia, Vietnam- a

challenge• Rule of Law- Singapore, Malaysia strongest.

Indonesia, Indo-China weakest• Respect for IPR- One of ASEAN’s strongest assets• Trademark: Protection strong throughout ASEAN

except in Philippines- but Manila now catching up with ASEAN standards

DOING BUSINESS IN ASEAN (III)

• Corruption- Instigated,condoned by Canada' competitors can be impediment to Canadian business

• Terrorism Threat in Indonesia• Information Security- No ASEAN

threat• Physical Security- ASEAN cities

among the safest in the world

DOING BUSINESS IN ASEAN (IV)

• Three Critical Recommendations:1. Selection of Local Partner: Most important

decision that will determine success of a business

2. Relationship+++ Maintenance: Without working this front constantly, business will falter

3. Importance of Etiquette: If form is compromised, business prospects diminish