ASEAN Must Build And Grow Regional And Global Tech MNCs -- Liew

KUALA LUMPUR, Sept 22 (Bernama) -- ASEAN cannot grow purely on a foreign direct investment (FDI) model but must grow and invest in the region's technology companies to move forward.

Deputy Investment, Trade and Industry Minister Liew Chin Tong said there may be a misconception that technology has to come from outside and that ASEAN is just a production site.

"If we have a lot more investment going into ASEAN technologies, we will eventually see the companies emerging as regional MNCs or even global MNCs,” Liew told a press conference after establishing the ASEAN Private Markets Council (APMC) here today.

"The potential is there, but we will need to do a lot more to connect the dots, so that you connect the funding, technology, and industrial policy to create the market in ASEAN," he said.

Stemming from one of the 12 initiatives championed by ASEAN Business Advisory Council (ASEAN-BAC), the APMC seeks to address the structural barriers that have historically constrained ASEAN’s private capital development.

In a statement today, ASEAN-BAC said these barriers include fragmented regulatory frameworks across member states, underdeveloped local fund managers, limited opportunities for large-scale capital deployment, a shallow and underperforming exit environment, and a decline in fundraising from global investors.

"Over 20 leading private financial market institutions across key ASEAN economies are committed to joining APMC as founding members," it added.

Meanwhile, Liew said the creation of APMC is to unlock regional investment potential, including investing in ASEAN’s technology sector and to create or achieve public purposes in the region.

"I hope to see this investment eventually play a role in the green transition of ASEAN, whether in terms of technologies, creating new solutions, experimenting with processes, or other innovations for green transition. 

"It should also involve investing in a blended financing form in the ASEAN power grid, so that energy is brought not only through an off-taker model but to every part of ASEAN, allowing the region to grow in tandem and allowing even the least developed countries to progress in the next five, 10, or 15 years," he said.

ASEAN-BAC Malaysia chairman Tan Sri Nazir Razak, who is also APMC protem committee chairman, said a McKinsey study showed that ASEAN private markets make up only 0.5 per cent of gross domestic product (GDP) against a global average of 1.5 per cent of GDP.

“That gap may sound like just numbers, but in reality, it means ASEAN is operating with only one-third capacity in terms of funding for high-growth and innovative companies,” Nazir said, estimating that up to US$60 billion in capital should be flowing into ASEAN private equity and venture funds to achieve the global average  GDP growth of 1.5 per cent.

"APMC’s mission is to strengthen ASEAN’s position as a globally recognised hub for private markets by integrating, easing and increasing capital flows into private markets, enhancing governance standards and fostering innovation,” Nazir said.

"We will promote ASEAN on the global stage, deepen engagement with regional and global capital allocators, persuade national regulators to reduce regulatory friction, coordinate development of research and benchmarks and broaden participation beyond primary hubs to secondary cities and frontier markets," he said.

-- BERNAMA