BANGKOK Ten months since the launch of the ASEAN Economic Community, businesses within the Association of Southeast Asian Nations are growing increasingly frustrated over the slow pace of trade and investment liberalization.
Improvements in financial access, especially for the bloc's unbanked population and small and midsize enterprises, will make or break the success of the AEC, according to regional leaders in finance and tech.
Munir Majid, president of the ASEAN Business Club, said 97% of companies in ASEAN are SMEs. These smaller companies, he said, are often seen as "losers" when it comes to economic integration, especially in comparison to large corporations and conglomerates with multiple production bases across the region.
"If [SMEs] fail as a result of integration, a lot of people will be thrown out of work and there will be social issues," Majid warned.
He also warned that policymaking efforts to boost financial inclusion are lagging behind the digital revolution. "Five years ago, you couldn't get a stable mobile connection in Myanmar. Today, you absolutely can," he said.
In contrast, 90% of the country's population still does not have a bank account, unchanged from five years ago. "Regulatory requirements in the financial system do not allow for the growth of the industry, despite the advancements in technology. Policy is the problem," Majid said.
As an industry player, Chartsiri Sophonpanich, president of Bangkok Bank, said he has seen some positive changes in ASEAN's business environment. While he agreed that some companies are showing "remarkable frustration" at the pace of financial liberalization, including the free movement of capital, there has been "much change" in how foreign and ASEAN companies operate, starting even before the AEC took form.
"Through Japanese investments from companies such as Toyota and Honda, Thailand was able to [embrace] added capability, a higher standard of living and movement of people through overseas training in Japan," Chartsiri said. He remained optimistic that changes over the coming years will allow each nation to share its competitive advantages. "I believe one plus one equals more than two."
Some panelists predicted that disruptive technologies will create a new marketplace for financing. "New fintech ideas like blockchain may be applied better in countries like Myanmar where regulations are still open," said Truong Gia Binh, chairman of Vietnamese IT company FPT.
Binh also urged companies to raise their collective voice, citing an incident in which e-commerce companies in Vietnam came together to protest a new internet law.