KUALA LUMPUR: Asean must lessen its dependence on foreign direct investment (FDI) and begin nurturing homegrown technology giants to shape its own future growth and innovation.
Deputy Investment, Trade and Industry Minister Liew Chin Tong said that for decades, technology and capital have come largely from outside the region, especially in manufacturing and innovation, highlighting the need to create a robust market within Asean itself.
To achieve this, the Asean Business Advisory Council (Asean-BAC) has announced the establishment of the Asean Private Markets Council (APMC), a regional platform designed to unlock the full potential of the private capital market in this region.
Themed “Unifying markets for shared prosperity”, the APMC establishment aligns perfectly with Malaysia’s Asean-BAC chairmanship, indicating a new chapter of coordinated growth for private markets across Asean.
“The creation of the APMC is to unlock regional investment potential, but not just any investment. I hope it is about investing into the future of Asean, investing into technologies, creating and achieving public purposes
“I hope to see this investment eventually play a role in the green transition of Asean. Whether in terms of technologies, creating technologies for the green transition or experimenting with new things, and also investing in a blended financing form so that even the least developed countries in Asean have an opportunity to grow in the next five, 10 and 15 years.
“This is a great effort because it is putting together private market operators or entities to come together for something in common. But beyond that, also building something to achieve public purposes,” he added.
In addition, Liew emphasised on building a stronger Asean that is rich and prosperous as the world is becoming more regionalised, moving away from the idea that the whole world is one global supply chain.
Asean-BAC Malaysia chairman Tan Sri Nazir Razak mentioned that the initiative was driven by the region’s underdeveloped private market landscape, prompting the creation of a regional platform to help it thrive.
Moreover, the total private market capital in Asean only accounts for 0.5% of gross domestic product (GDP) compared to the global average of 1.5%, amounting to a US$60bil gap as highlighted by a report from Asean-BAC and McKinsey & Company.
“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.
“Through six strategic pillars, APMC will build a more connected and resilient private capital ecosystem.
“We aim to enhance capital flows in the region, raise Asean’s visibility to global investors, strengthen integration and drive collaboration across the region,” Nazir said.
He noted that Asean private equity and venture funds are hindered by structural barriers, namely, fragmented regulatory frameworks, underdeveloped local and regional funds that lack long track records, shallow exit environments and a decline in the appetite of global investors.
Looking ahead, APMC is expected to increase private equity and venture capital investments in Asean private markets for approximately two to three times, a significant contributor to GDP, employment and growth in the region.
