Malaysia To Propose Asean Business  Entity Category To Foster Regional Business growth

By By Norsyafawati Ab Wahab & Mikhail Raj Abdullah

KUALA LUMPUR, May 28 (Bernama) -- The Malaysia chapter of the ASEAN Business Advisory Council (ASEAN-BAC) will propose that ASEAN countries recognise a category called the ASEAN Business Entity (ABE) to foster companies that are neither strictly local nor global, encouraging more regional business.

Once certified as an ABE, a company can enjoy incentives and privileges granted by member states, including greater market access, Tan Sri Nazir Razak, Chairman of Asean-BAC Malaysia, said today. 

Nazir, also chairman of ASEAN-BAC Malaysia from 2023 to 2026, stated that ABE-certified companies could undertake back-office outsourcing, such as information technology (IT) operations, in another ASEAN country.

"I would like to see more actual transactions to stimulate deals between ASEAN companies," he said when asked about Malaysia’s private sector expectations for when Malaysia takes over the ASEAN Chairmanship in 2025, in an interview with Bernama today.

Malaysia will host next year's ASEAN summit and chair the regional ASEAN-BAC and related meetings, while Laos is hosting the 44th summit this year, themed "ASEAN: Enhancing Connectivity and Resilience."

Comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, ASEAN offers immense potential for intra-regional transactions, with a consumer base exceeding 700 million.

ASEAN, the world’s third-largest economic bloc, will further expand its market with Timor Leste's admission as the 11th member, currently enjoying observer status.

In justifying the need for ABE, Nazir highlighted hurdles faced by companies, such as Indonesian rules mandating IT outsourcing remain within the country, inhibiting regional operations.

Recognising companies as ABEs and allowing them to operate regionally would enhance their performance, enabling them to reap economies of scale, Nazir emphasised.

"So, if you're certified as an ABE or a regional company, then perhaps you get some preferences and benefits compared to being foreign (entities), though not as much as local ones," said Nazir.

Nazir pointed out the absence of a fully-fledged ASEAN brand, suggesting the need to find better ways of fostering an ASEAN identity.

For instance, as an ABE, a company could potentially enjoy free movement of skilled personnel or labour within member states.

Recalling his experience as CIMB Group Holdings Bhd chairman and group chief executive officer, Nazir noted limitations in managing a regional entity, particularly concerning personnel promotion due to immigration rules.

"Ideally, a promotion is most beneficial when individuals can gain experience working in various ASEAN cities. However, various immigration rules hinder this."

"However, if CIMB is recognised as an ABE (and free movement of skilled personnel is allowed), it can happen. This would be beneficial for everyone as individuals would be able to assume roles that best suit them," he said.

When asked how the certification would be implemented, Nazir suggested that the ASEAN Secretariat in Jakarta could certify companies qualifying as an ABE or allow member states to decide and define the criteria for ABE status.

"We are realistic about ASEAN economic integration, which must be done within limits, considering national sovereignty, domestic priorities, and political realities."

"We cannot pursue integration excessively. Our goal in ASEAN-BAC is to make meaningful progress in ASEAN integration within those constraints," he said, urging the private sector in Southeast Asia to focus on practical transactional deals in products and services.

"ASEAN-BAC’s role is within that framework, and ABE is among our proposals to accomplish more, even though 'we know the limitations,'" he said.

Meanwhile, Nazir said another project that the ASEAN-BAC is working on includes enabling a company seeking public listing to issue an ASEAN initial public offering (IPO) prospectus, allowing it to raise funds from retail investors not just from the home market but also from across the region.

Currently, companies going for listing cannot raise retail funds from other markets.

“It’s about time to have an ASEAN IPO prospectus as it means that the companies going for listing on Bursa Malaysia would have a wider market to source funds from anyone in Malaysia in the home market and anyone across ASEAN, helping them grow," he said.

He said ASEAN-BAC Malaysia is preparing these proposals for 2025, recognising that it is better to get the groundwork started now and presented next year during Malaysia’s ASEAN Chairmanship.

 – BERNAMA