A few years ago, Indonesia’s former Minister of Foreign Affairs from 2009 to 2014, Marty Natalegawa, wrote a book titled “Does ASEAN Matter?“. In this book, he reflected on the role of the Association of Southeast Asian Nations (ASEAN) in this region of the world, and, by extension, in East Asia, the Asia-Pacific, and the Indo-Pacific, questioning whether ASEAN mattered or not. A similar question could be asked, mutatis mutandis, here and now, in our case, to find out whether the Southeast Asian markets are of interest to the public and private sectors of our country. Considering the perspectives of both sectors regarding a market projected to become the fourth largest economy in the world in the coming years, and where economic, demographic, and strategic reasons suggest a need for presence.
Challenges and Perspectives in the Southeast Asian Market
Firstly, public approaches, in the form of strategic statements such as “A strategic vision for Spain in Asia 2018-2022” or “The Foreign Action Strategy 2021-2024“, place within a broader framework, the Asia-Pacific region, a region with its own identity and substance, like the Southeast Asian financial market. This is clearly reflected, indeed, in the latter of these strategic statements, which states that “for Spain, it is essential to defend (…) a greater presence of our companies (in Asia Pacific)“. Subsequently, however, the “Strategic Plan of Casa Asia 2022-2025” partially addresses this situation by identifying, among its areas of focus, the Southeast Asian markets, distinguishing themselves from the rest, undoubtedly represent some progress.
Strategies to Enter the Southeast Asian Markets
However, the discreet profile of these approaches should be counterbalanced with a more assertive foreign policy in this region, a foreign policy with distinct profiles, whose absence or weakness cannot be justified by the foreign policy implemented by the European Union. A good example of assertiveness is the “Seventh High-Level Dialogue on Economic Relations between ASEAN and Italy“, held in Bangkok on October 3 and 4, 2023, preceding the Eighth Dialogue, scheduled to take place in Manila on November 5 and 6, 2024. This Dialogue, aimed at exploring investment opportunities in various sectors of the Southeast Asian markets, with notable participation from Banca Sviluppo, Cassa Depositi e Prestiti, and Khazanah Nasional Berhad, the Malaysian sovereign wealth fund, sets a path to follow in my opinion.
When we combine the discreet profile mentioned earlier with the limited trade exchanges between our country and the countries of the Southeast Asian market, and even more limited Spanish direct investments in the region, with the significant exception, indeed, in this latter case, of the investment made by Acerinox in Johor (Malaysia), the inevitable conclusion that must be drawn is that there is a fundamental shortcoming in addressing our public and private positioning in the Southeast Asian market. This shortcoming lies in the fact that the Southeast Asian markets are currently not among the priorities of our foreign policy. This could be due to various reasons, such as the absence of a specific strategy; reliance on community policy to mask the lack of a specific policy; or insufficient means and resources.
Impact of Official Visits on the Development of the Southeast Asian Markets
Nevertheless, these shortcomings are reflected in something that directly impacts our interests in the region, such as the limited official visits to the Southeast Asian markets. These visits are essential to support the work of our ambassadors, our commercial advisers, and ultimately, our companies. While it is true that all of them – ambassadors, commercial advisers, and companies, along with Spanish chambers of commerce and regional economic promotion institutes – strive with commendable determination and effort to overcome the obstacles present in the Southeast Asian market, this is not sufficient, especially when the goal is to gain ground in these markets and compete effectively with stronger and better-equipped competitors, whether local or foreign.
Obstacles and Opportunities in Accessing the Southeast Asian Financial Market
Alongside these shortcomings, there are other aspects that need to be highlighted as well, such as the low level of information available in our country about these markets in the Southeast Asian financial market; the difficulty of stepping out of usual comfort zones, such as the European Union, Latin America, North America, or North Africa, but also China, South Korea, Japan, and even Saudi Arabia, Qatar, and the Emirates; or the fear – more emotional than rational – of venturing into countries that require presence, patience, and persistence in conducting business. The informative efforts carried out by Casa Asia and the Spanish Business Association Asean (ASEMPEA), among other organizations and entities, regarding the importance of this region in the Southeast Asian market, are gradually yielding some results. An important result, but still insufficient.
Looking back and remembering when we established ourselves in Malaysia exactly ten years ago, I observe that the journey taken by our companies in the Southeast Asian markets, while not spectacular, has certainly been noteworthy, especially considering the starting point. Therefore, if I had to answer the question posed at the beginning of this article, I would say that Southeast Asia is now much more interesting than it was a few years ago, but despite that, not as much as it should be. Economic reasons – such as the ASEAN Economic Community or the Regional Comprehensive Economic Partnership, promoters of the world’s most significant trade bloc – demographic factors – with a population of over 666,473,348 million inhabitants – and strategic considerations – like the Strait of Malacca, a key global transportation route for goods – should be enough to convince us that this interest needs to continue growing.
Antonio Viñal
Lawyer
AVCO Legal
madrid@avco.legal
