ASEAN: ‘The rhetoric about one vision and one community is just that: rhetoric’ – Nazir Razak

The Association of Southeast Asian Nations (ASEAN) was never intended to be that deeply integrated, the Chairman of CIMB Group Nazir Razak has told a group of business leaders at Asia House.

Mr Razak, the recipient of the Asia House Asian Business Leaders Award 2015, explained that when ASEAN came together 49 years ago in Bangkok it was “about the Cold War and the need to pull together in the face of the USA and Russia to preserve the way we do things.”

“This concept of collaboration and economic integration is new. Otherwise we would not have called it ASEAN because what are we all going to be called? ASEANites? I think you have to separate the rhetoric from the reality,” he said in conversation with Chief Executive of Asia House Michael Lawrence at the ASEAN on the global stage conference held, in partnership with KPMG, on Friday 16 September.

“ASEAN has always been focused on trade and investment and the rhetoric about one vision and one community is just that: rhetoric,” he said.

He said the ambitions of the 2007 ASEAN Charter – which included a single production base and the free movement of people – were lofty, but they were not realistic.

“I don’t think they really believed they could get there, but they did as much as possible and there has been 99 per cent removal of tariffs,” and “lots of initiatives to bring ASEAN together,” he explained.

But the Malaysian banking executive, who is the brother of Malaysia’s Prime Minister Datuk Seri Najib Tun Razak, said being based in ASEAN was “very frustrating.” “We have developed our bank based on non-tariff barriers (NTBs) coming down but they have not come down.”

The bank that he is chairman of – CIMB Group –  is a leading ASEAN universal bank headquartered in Kuala Lumpur and one of the world’s largest Islamic banks.

He said there remained lots of NTBs that had a big value to business that were not sensitive that could be eliminated. “I think it’s best if businesses themselves spot them. One might be to allow free movement of senior banking execs across ASEAN,” he suggested.

He said the ASEAN Community Vision 2025 was much more realistic than the 2007 ASEAN Charter. “It no longer talks about a single production base but rather about an integrated and more cohesive economy,” he explained.

He said he had great hopes for ASEAN, pointing out many of the countries now had ‘strong men’ in charge citing Thailand, the Philippines and Indonesia, as examples. “Duterte has a very high approval rating and all the businesses I speak to there are quite happy with him,” he said. “Jokowi is a strong leader and Indonesia has become much more confident in itself,” he added.

“2017 marks the 50^th anniversary of ASEAN with the Philippines in charge, so I hope to see them give ASEAN a push,” he added.

Brexit impact

So what impact has Brexit had on ASEAN?

“Brexit has given a push to the sceptics of ASEAN but it’s also an opportunity because Britain will have to be nice to us now and with that comes a lot of opportunities to do business together,” he said.

In reference to Brexit, Mr Razak said that “Britain had always been good in a crisis”.

“I think Britain has proven so again now,” he explained.

But he said that whilst he felt the economic situation in the UK was OK for the time being, “if the uncertainty got prolonged, the money might come out” so he said he hoped to see clarity on the UK’s relations with the EU soon.

In a separate interview with Asia House Mr Razak had said that Brexit demonstrated that “top-down integration is not sustainable” and that he expected it would lead to a strengthening of ties, with Asia, especially with Malaysia.

As for the prospects of a UK-ASEAN FTA, once the UK exits the EU, he said it might be easier for the UK to do bilateral FTAs with member states given that the Regional Comprehensive Economic Partnership (RCEP) was still being negotiated.

“I think Malaysia and Singapore would be very keen for FTAs with the UK,” he added.

The conference, which drew on insights from KPMG’s recently published Southeast Asia in transition report, attracted business leaders and diplomats. Speakers included Lord Green of Hustpierpoint and Senior Partner and Member of the Board at KPMG UK LLP David Sayer.

KPMG launched a report titled Forging ahead: UK-ASEAN business after Brexit at this conference. Asia House has contributed insights from its network to the publication. Download the report here.

naomi.canton@asiahouse.co.uk

To read an exclusive interview that Asia House conducted with Nazir Razak about Brexit click here.

To read an interview that Nazir Razak gave to Asia House ahead of being presented with the Asian Business Leaders Award click here and here.

To read what Mr Razak said in his acceptance speech of the Asian Business Leaders Award and how he felt that 2015 was an annus horribilis click here. 

To see all the events that Asia House is holding as part of the Asia House Brexit Series click here.

To read all the Asia House stories on Brexit click here.