Khun Prachuab Chaiyasarn
Khun Vichate Tantiwanich
2Morrow Scaler programme team and delegates CIMB colleagues 

Good evening. 

INTRODUCTION 

To all delegates, selamat datang to Kuala Lumpur. It is always a pleasure to welcome our ASEAN friends to the city. To Khun Vichate, thank you for your support to CIMB. We are pleased to host this dinner, and I am personally excited to speak to this audience of young and dynamic business people.

I have been asked to share my experiences in growing CIMB as an ASEAN universal banking group from its humble origins as a Malaysian investment bank.

Let’s start by giving everyone here a common understanding of CIMB – who we are, where we came from and what we are about.
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--VIDEO--
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CIMB & ASEAN

I hope you were impressed with the video!

Now for the truth! As business people, you know that the true story is never as easy or as logical as it is made to seem on hindsight, in a corporate video.

Nevertheless, in the end, the outcome has been very satisfying: 

1. We have transformed from a small Malaysian investment bank to ASEAN’s 5th- largest banking group by assets.
2. We are as “truly ASEAN” as it gets – more than AirAsia. This year, we “open shop” in Manila to complete our presence in ASEAN.
3. If you had invested RM1 in the CIMB IPO in January 2003, it would have been worth RM10.60 in December 2017, giving an average annual return on 68%.
   

But it was a tough journey of ups and downs, mainly good, but also some bad decisions, but ASEAN is always exciting!

Expanding across ASEAN is potentially very rewarding. 

1. Economies of scale: In banking, economies of scale is key → core banking system (2009) RM1bn. If individually ~RM1.7bn.
2. Widening of talent pool: Board and management teams are multi-ASEAN today and will become more so.
3. Success in ASEAN can set the foundation for expansion beyond the region. If you can conquer diverse ASEAN, you can surely do well anywhere.
   

But don’t expect too much from the AEC! 

1. 2007 Charter vs. 2015 Charter
   
   2007 Charter: To become "a single market and production base, characterised by the free flow of goods, services, and investments, as well as the freer flow of capital and skills by 2015”. 
   
   2015 Charter: To become “a highly integrated and cohesive; competitive, innovative and dynamic; with enhanced connectivity and sectoral cooperation, and a more resilient, inclusive and people-oriented, people-centered community, integrated with the global economy”. 
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2. Reduce tariffs, but surge in non-tariff measures: Average tariff rates of ASEAN countries declined from 8.9% in 2000 to 4.5% in 2015, but the number of non- tariff measures increased from 1,634 to 5,975 over the same period.
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3. ASEAN Banking Integration Framework: The focus is primarily on how operating licenses should be agreed bilaterally between countries when there are already many banks operating across multiple countries and the real value enhancement is to improve multinational banking operations to make ASEAN banks more competitive vis-à-vis global banks and benefit the ASEAN consumer. What the banking framework should have focused on instead is how banks move personnel, information or operations across borders to exploit cross border economies of scale. This brings me to my next point. 
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4. Mutual Recognition Arrangements (MRA) are limited: Countries need access to pools of human capital with new skills, such as data scientists, IT systems managers and software coders. Reducing barriers to the mobility of skilled workers in the region necessitates the expansion of existing MRAs among ASEAN countries. 
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5. Customs and logistics frustrate e-commerce: Online retailing pre-dates the Fourth Industrial Revolution, yet it remains inefficient at the regional level. Recently, I was shocked to discover that some Malaysian fashion retailers still find it easier and quicker to deliver their goods to the UK than to Indonesia due to logistics and customs issues.
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6. Lots of work-in-progress initiatives.
   

Ladies and gentlemen

KEY LESSONS

Advice for navigating ASEAN based on experience (and bruises!) 

1. ASEAN is very diverse and very complex. Facts: 
   i)  ASEAN has world’s largest Muslim population, 2nd largest Buddhist population and 3rd largest Christian population.
   ii)  Across ASEAN, there are more than 700 ethnicities and more than 1,300 languages, of which some 700 languages are spoken in Indonesia alone.
   iii)  There is a whole range of political systems.
   
   Personal lessons: 
   -  Yes 
   -  Octo 
   -  Outriders in Bangkok 
   -  Counter-traffic in Manila 
   -  Corporate culture 
   
   Good ASEAN businesses should not be foreign anywhere and must be multi- local. Each country’s operations must have the best local talents.
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2. Politics is more important than economics. Don’t get to close to any government. 
   -  CIMB Thai 
   -  Government change. Malaysia as an example.
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3. Integrity: No ‘greasing’ 
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4. Community: Empathy 
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5. Humanity: Don’t show off. Unlike EU, nationalism is strong in ASEAN, which staunchly emphasises sovereignty of member states.
   

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Ladies and gentlemen 

FOURTH INDUSTRIAL REVOLUTION 

As I look into the future, I must admit that was initially quite jaded about ASEAN. However, as I thought about the tsunami that is the Fourth Industrial Revolution, I have become even more determined to push for regional economic integration.

The Fourth Industrial Revolution: 

1. Importance of economies of scale – Ali and Tencent in payments.
2. Does not recognise national borders.
3. Needs government intervention to help ease movement of data and talent across borders.
   

In my capacity as Chairman of the World Economic Forum’s ASEAN Regional Strategy Group, last year I worked with teams from WEF and Asian Development Bank on a study that explores what the Fourth Industrial Revolution means for ASEAN integration and how the regional bloc should respond. Our report makes several recommendations: 

1. Empower secretariat to lead.
2. Fund secretariat to get things done.
3. Transform secretariat into platform organisation so details of change get developed by interested experts.
   

Ladies and gentlemen

CONCLUSION

ASEAN is very diverse and very complex, and therefore very challenging, but potentially very rewarding, and for the Fourth Industrial Revolution future, I think it is essential.

Let’s work together to call for greater integration to face the Fourth Industrial Revolution.