UOB CEO Wee Ee Cheong talks about ASEAN as the next engine of global growth at SIBOS 2015

He expects intra-ASEAN trade to hit the US$1 trillion mark in 2020.

Mr Wee Ee Cheong, Deputy Chairman and Chief Executive Officer, United Overseas Bank, spoke at the ASEAN Day opening at SIBOS about “ASEAN as the next engine of global growth”.

Below are some of the insights he shared during his speech:

UOB remains confident of ASEAN’s prospects

• UOB predicts that intra-ASEAN trade will hit the US$1 trillion mark in 2020. In the past five years, intra-ASEAN trade had almost doubled (from US$332bn) to reach US$600 billion.
• Investors are still keen on the ASEAN story and have been bringing in significant amounts of investments into this region. Foreign Direct Investment flows into ASEAN almost tripled from 2009 to 2013 (from US$47bn to US$125bn) and surpassed FDI flows into China, for the first time in 2013.
• The UN Conference on Trade and Development reported that ASEAN has overtaken China as the most attractive destination for FDI.

“Overall, we remain confident of the region’s prospects. As an economic bloc, ASEAN is now the 7th largest country in the world and is expected to be the 4th largest by 2030. We all know ASEAN is strategically positioned in terms of geography and demographics. Geographically, ASEAN’s proximity to major markets such as China and India, reinforces its strategic role in the global value chain. Emerging markets, such as those in the Mekong basin, are viewed as new frontiers with untapped potential.”

“Asia and ASEAN’s fundamentals are a lot sounder and their economies stronger than before. Today, Asia clearly does not have the structural issues of 1998. While there are some concerns about consumer leverage, policy makers are responding proactively. From the standpoints of current account balances, foreign reserves, external debt or corporate leverage, the risks in Asia today are a lot more manageable.”

UOB reaffirms Asean will be the next global engine of growth

• There are four ASEAN members in the TPP (Singapore, Brunei, Malaysia and Vietnam), with more countries waiting to join the pact. The landmark agreement among 12-member economies accounts for about 40% of world GDP and a quarter of world trade.
• Beyond the AEC and TPP, there is China’s ‘one belt one road’ and infrastructure connectivity initiatives. The 21st Century Maritime Silkroad, connecting China with Southeast Asia, or the 80,000 kilometre trans-Asian railway, are just two examples of large-scale infrastructure projects connecting ASEAN to new opportunities.
• The economic benefits from these projects will be enormous and will help strengthen ASEAN’s role in the global manufacturing and supply chains.
• The ongoing internationalisation of RMB will also help strengthen linkages between ASEAN and its key trading partners.

“With the economic struggles in the West and China’s self-engineered slowdown, the world is looking for the next global engine of growth. It could well be at our door-step. But it requires cooperation and collaboration across countries and cultures, corporates, banks and regulators, working together to realise the potential for all.”

“In our interconnected world, ASEAN’s potential extends beyond that of a regional association, integrated market or production base. It is a strategic hub and its role can be pivotal.”

“Structural trends are reinforcing ASEAN’s role in the global arena. With economic and regulatory changes, banking models are gravitating from, the West, to the East. Increasing connectivity and geopolitical dynamics are integrating markets, whether physically or digitally. Amid the conflicting forces of global inter-dependence and economic nationalism, there are moves to strengthen linkages among countries.”

UOB’s ASEAN presence

• UOB set up FDI advisory units 4 years ago to support cross-border flows within and into ASEAN, from other parts of the world. We tie up with government agencies, industry bodies and other eco-system partners to provide one-stop solutions to clients as they expand regionally.
• We now have FDI teams across 9 countries (Singapore, Malaysia, Thailand, Indonesia, China, HK, Vietnam, Myanmar and India).
• To date, we have helped close to 600 companies expand regionally.

“UOB now has more than 500 branches across Asia, including our latest branch in Myanmar. We have the largest Southeast Asian network among Singapore banks.”