Friendlier Economic Environment
The 21-member Asia-Pacific Economic Cooperation (APEC) organization notes that governments in the region are steadily dismantling trade barriers. Between May and November 2013, APEC economies implemented seven trade-easing measures, 89 trade-remedy measures (mainly anti-dumping), and 17 other trade and trade-related measures, the APEC report notes, citing data from the World Trade Organization. Between June 2013 and February 2014, 10 APEC economies adopted 18 new policy measures relating to foreign investment, 14 of which were aimed at liberalizing or promoting investment (while four had the potential to restrict investment).
The trade and investment reforms are wide-ranging across the APJ region. Some recent examples: In July 2013, South Korea amended its Telecommunications Business Act, which allows foreign investors to acquire up to 100% of a company in the country’s telecommunication businesses. In August 2013, Indonesia unveiled an emergency fiscal package to promote foreign investment. Then in January 2014, Malaysia announced a new automotive policy to make the country a regional hub for energy efficient vehicles, and granted an exemption from excise duties and import taxes for hybrids and electronic vehicles for models assembled in Malaysia.
According to the Association of Southeast Asian Nations (ASEAN), its 10 member states received foreign direct investments of $331 billion between 2011 and 2013. The biggest shares came from the European Union ($73.4 billion), Japan ($56.3 billion) and ASEAN member states ($56.1 billion).
“The region is starting to work together more effectively. It is leveraging opportunities across the value chain and providing both goods and services under new and more collaborative trade agreements within the region and also globally,” Curry says. That should translate into revenue growth and eventually into more regional wealth.
To succeed, Curry notes, growing companies in the region should be following the usual list of best-practices: rethinking the value they provide, identifying core activities, and considering possibilities for acquisitions and divestitures. They also need to use talent as a differentiator, and manage risks better.
But it is increasingly important to realize that speed is critical. The idea of transformation being a three-year journey is over, Curry says. It has become a much shorter horizon of six to nine months, or even three months, focused on waves of continuous change and improvement. Companies can no longer make such significant investments in enterprise-wide change — it has become far more dynamic.
Curry cites one example of a midsized bank in Asia that changed strategies to meet new market demands. The bank had a 20- year reign of success at home, but new competition forced it to rethink its product offerings and the way those products were accessed by an increasingly diverse customer base with differing needs and expectations. For years, it offered lowincome customers quick access to funds, promising to process loan applications within minutes. “It was able to do that for a long time and was seen as a reliable bank,” says Curry.
In recent years, however, the bank began losing customers to larger, global banks entering its home markets with similar products and services, which were delivered more dynamically and with improved customer experience. Realizing it would never win in a head-to-head battle with its bigger competitors by operating in the home market alone, it began expanding to other countries in the region, opening some new banks and acquiring others. The bank’s next challenge will be to: keep pace with fast-changing consumer needs and intensifying competition from nimble competitors; embed the ability to make market adaptations; introduce systems to support increasing digitalization; and to keep ahead in product innovation.