ASEAN region law firms would be wise to consider establishing 2 consulting practices around the growing interest in the region by large multinational companies.
According to a recent report by the Economist Corporate Network on behalf of Baker & McKenzie, as detailed in CFC Innovation, the ASEAN block is viewed by multinational companies as ripe with opportunity as a result of the recently agreed (but not yet fully ratified) Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP) and China’s One Belt One Road (OBOR). These developments are viewed, the report details, as “working in tandem to improve connectivity and the overall business environment in the region” — and boosting intra-regional trade and investment by approximately 85%.
TPP signatories Malaysia and Vietnam in particular are poised to see between a 7 and 8% boost in national income. 65% of multinational firms expect to see a demand for their products and services in the region and 56% also expect to see ASEAN region intellectual property rights improve.
One Belt One Road
The survey also detailed that: “59% of the surveyed companies expect OBOR to lead to partnerships with Chinese companies, while around 50% of the respondents believe OBOR will increase M&A activities and investments in the ASEAN region.
Around 70% of the companies are already getting ready for OBOR by undertaking initiatives that help to improve their competitiveness. These preparations include building up human capital capabilities; sourcing for project development opportunities; looking for joint venture partners; looking for potential acquisitions and establishing new representative offices.”
Law firms should seek to assist foreign companies
Bee Chun Boo, Partner at Baker & McKenzie in Beijing, was cited in the report as “advis[ing] businesses wishing to capitalize on the opportunities arising from OBOR to “engage advisors ‑ be it legal or financial ‑ who not only understand the local and international business and regulatory environment, but more importantly, are also able to offer on-the-ground assistance at both ends of the deal and navigate through some of the cultural and business nuance that often arise in cross-border transactions.”
2 consulting practices ASEAN region law firms should consider now
Based on the economic developments the ASEAN region is now seeing, two key consulting practices ought to be at the forefront of consideration by law firms leaders. Notably, some ASEAN law firms have already adopted consulting practices as a means by which to more effectively attract clients entering or expanding in the region. And as Asia Law Portal has detailed previously, these consulting practices are widely seen to be very useful to firms seeking to more effectively compete for work among a sea of competitors.
Most useful for foreign companies entering the market would be ASEAN region law firm consulting arms dedicated to:
1. Comprehensive New Market Entry — Spanning the entire spectrum from where and how to open operations — to complex regulatory and political strategies aimed at maximizing profit and ameliorating risk.
2. Opportunities in Government Prime and Subcontracts (which OBOR and other initiatives — including a large initiative by Japan — are driven by) – would bring in new clients among companies with experience in large government-tendered projects desirous of on-the-ground intelligence about how they might effectively secure those contracts.
Together, these two consulting services address head-on the ASEAN region’s key commercial needs as seen by clients. Legal services then can be utilized to provide the additional advisement to help clients navigate — in a 360 degree fashion — the ASEAN region’s complex political, economic and legal landscape.