Page 12 - AEC Digital Edition

Opportunities in the age of AEC –
A risk point of view

Marsh, a global leader in insurance broking and risk management, offers advice for corporates, insurers and

regulators to strategically align themselves in the era of a more economically integrated Southeast Asian

region.

After the adoption of the ASEAN Economic Blueprint to policy makers such as the prevention of capital and
in November of 2007 as one of the three key pillars to talent drain from poorer countries to nearby developed
a more unified ASEAN (along with political/military economies; avoiding Greece-like debt contagion (sovereign
and cultural cooperation), the ASEAN economic block is debt, budget / account deficit, etc) as the region integrates
again at a major milestone at the end of 2015. The member economically, and the juggling of opening domestic
countries have taken tremendous strides since 2007, market with the sometimes necessary protection of local
particularly pillar 1 of the AEC blueprint – Single Market and businesses.
Production Base, and pillar 4 – Integration into the Global
Economy. The progress was made during a period that has As the preeminent risk management intermediary
seen robust economic growth, emergence of ASEAN private between both local and international companies and
sector powerhouses, and unprecedented growth in ASEAN’s insurers, Marsh has spent years advising clients in ASEAN
weight in global trade and capital flows. and helping them to thrive and succeed. The Q&As below
reflect some of our experts’ view on the risk challenges
With the major achievements in strengthening trade and opportunities presented by AEC integration through
ties not only between member states but with external three lenses.
partners (particularly the US, Europe and People’s Republic
of China), service industry liberalisation will be next on the Business Lens – How to better prepare for
minds of ministers and private sector CEOs. Furthermore, a more integrated ASEAN?
accompanying and underpinning greater movement of
goods and services will be more mobile capital and skilled In a recent Asia Development Bank survey in nine
labor. ASEAN markets (ex. Malaysia), 55% of respondents
reported being unaware of the AEC. Granted many of these
After 2015, we will likely see even greater transformation businesses may be SMEs (most foreign multinationals
in the economic landscape of ASEAN, and how well are not only aware but may already have business plans
the member states can continue the reforms while ready), this lack of public awareness is worrisome as
accommodating vast differences in development and full integration should not be just a government driven
economic maturity will determine the extent to which the initiative but closely involves the private sector.
region can benefit from unification. Indeed, the diversity of
ASEAN member nations in economic development, political What are some of the strategic issues that can
ideology and culture, present a myriad of challenges arise from a more integrated economic block?

Companies that already face strong competition in their
domestic market need to brace
for impact on capital, talent
and technology access with an
influx of foreign competition.
As borders open, foreign
companies with new ideas,
services and products enter and
not only compete for revenue but
also talent (domestic workers
now have more choices with
the increased talent mobility).
On the other hand, there is
the possibility of new access
to more competitive Employee
Health & Benefits packages
from overseas insurers. The
competition created by the
availability in turn creates an
impetus for healthcare systems
and platforms surrounding
the healthcare eco-system to
be upgraded. Given the rapid

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