Asean Economic Community And Opportunities For Accountants And Professional Service Providers
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Asean Economic Community And Opportunities For Accountants And Professional Service Providers

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Opportunities for professional service providers in view of the formation of Asean Economic Community by 2015

Opportunities for professional service providers in view of the formation of Asean Economic Community by 2015

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    Asean Economic Community And Opportunities For Accountants And Professional Service Providers Asean Economic Community And Opportunities For Accountants And Professional Service Providers Presentation Transcript

    • ASEAN Economic Community and Opportunities For Accountants and Professional Service Providers
      Nik Mohd Hasyudeen Yusoff
      CEO and Thought Leader
      Inovastra
      Competitiveness Through Innovation and Strategy
    • ASEAN – an Overview
      The Association of South East Asian Nations (ASEAN) was established on 8 August 1967
      It consists of 10 countries
      As of 2006 ASEAN has a population of 560 people, total land areas of 4.5 million square kilometres, combined GDP of US 1,100 and total gross trade of US 1,400 billion
    • ASEAN - Membership
      Brunei Darussalam
      Cambodia
      Indonesia
      Lao PDR
      Malaysia
      Myanmar
      Philippines
      Singapore
      Thailand
      Viet Nam
    • Some Indicators of demand
    • ASEAN Economic Community
      The ASEAN Economic Community shall be the end-goal of economic integration measures as outlined in the ASEAN Vision 2020.  Its goal is to create a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities in year 2020.
    • ASEAN Economic Community
      The ASEAN Economic Community shall establish ASEAN as a single market and production base, turning the diversity that characterises the region into opportunities for business complementation and making the ASEAN a more dynamic and stronger segment of the global supply chain. ASEAN’s strategy shall consist of the integration of ASEAN and enhancing ASEAN’s economic competitiveness.
    • Initiatives Pursued So Far
      Mechanisms and measures to strengthen the implementation of its existing economic initiatives including the ASEAN Free Trade Area (AFTA), ASEAN Framework Agreement on Services (AFAS) and ASEAN Investment Area (AIA)
      Accelerate regional integration in the following priority sectors by 2010: air travel, agro-based products, automotives, e-commerce, electronics, fisheries, healthcare, rubber-based products, textiles and apparels, tourism, and wood-based products
    • Initiatives Pursued So Far
      Facilitate free flow of goods, services, investment, capital and labour
      Allow foreign participation of foreign equity: 49% by 2008, 51% by 2010 and 70% by 2015
      Strengthen the institutional mechanisms of ASEAN, including the improvement of the existing ASEAN Dispute Settlement Mechanism to ensure expeditious and legally-binding resolution of any economic disputes
      The above initiatives are pursued through negotiations involving the government and private sectors
    • Initiatives Involving the Accountancy Profession
      Based on the ASEAN Framework Agreement on Services
      Focus on providing market access to accountants into various ASEAN countries and how the services of foreign accountants would be recognised by each government (national treatment)
      ASEAN Mutual Recognition Arrangement Framework on Accountancy Services was signed in 2009
    • ASEAN Mutual Recognition Arrangement Framework on Accountancy Services
      To facilitate the negotiations of MRAs on Accountancy Services between or among ASEAN Member States by providing a structure towards the conclusion of such MRAs
      Areas covered:
      Education
      Licensing
      Demonstration of competency
      Experience
      Reference to IFAC standards
      Domestic regulation
    • Opportunities Drivers
      The need to continue developing the economies within ASEAN; there are developed, developing and newly developing countries
      Globalisation of regulation and standards – IFRS, Basel II
      Improvement of governance, both in the public and private sectors
      ASEAN transforming itself into a ruled-based regional body with the adoption of ASEAN Charter
    • Risks and Challenges
      Domestic regulation which may not be transparent and consistently applied
      Culture and practices which differ from one country to another
      Changing business environment and disjointed responses from various countries
    • Export of “Accounting” so far
      Mode 1 – Business Process Outsourcing services in accounting and finance is taking shape in Malaysia. The presence of captives, which serves a particular company on a global basis, as well as general outsourcing companies is beginning to position Malaysia as a hub of BPO in outsourcing of accounting and finance.
    • Export of “Accounting” so far
      Mode 2 – More local and international higher education institutions in Malaysia offering accounting courses. International accounting bodies are offering their qualification through collaborations with local education institutions. Presence of international students to study accounting is building up.
      Singapore is positioning itself as the hub of accounting services.
    • Export of “Accounting” so far
      Mode 3 – The larger global accounting firms are structuring themselves on regional basis and sharing profit and loss across borders while continuing to comply with domestic regulations of each jurisdictions.
      Services offered cover wide range of areas and not limited to accounting and auditing.
      More new accounting groupings are having presence in this part of the world as well.
    • Export of “Accounting” so far
      Mode 4 – Some small accounting firms have started operations in Asean countries such as Cambodia, Indonesia and Vietnam.
      These operations are through collaboration with local partners, through partnerships or loose arrangements.
    • Some observation
      Export of accounting should be viewed holistically and not limited to the CPC categories
      Opportunities not limited to accountants
      Equity is not really a critical aspect in liberalisation, profit sharing structure goes beyond equity and driven more by competencies and intellectual property
      Competencies demanded in target countries are the critical driver of market access, not what we believe we could export
      There are enough rooms for smaller players, however having access to accounting network helps in opening new markets for smaller firms
    • Potentials for further export
      ASEAN Economic Community provides access to other economics with higher GDP and has larger market demands
      Globalisation of regulation such as implementation of International Financial Reporting Standards would create demands for competent accountants and BPO
      Firms with specialist knowledge and competencies would continue to be able to create opportunities for themselves
      Education and training in accountancy offer great potential for export
    • Issues and Challenges
      Attitude towards competition – even when the market is closed, firms are not excited to compete
      Export ready products and services (Capabilities) – cannot promote good and services which have no demand
      Capacity – most firms, especially professionals, are small and has limited capacity in terms of brainpower and financial capabilities – export through networks would be the way forward
      Government, the largest customer in any economy, should encourage competitive practices
      Over-coordination is not welcomed
    • ASEAN Federation of Accountants
      The ASEAN Federation of Accountants (AFA) was organized in March, 1977. It was established to serve as the umbrella organization for the national associations of accounting professionals of the member countries ASEAN
      Vision - To be globally recognised as the body that represents the accountancy profession in the ASEAN region
      Mission - To develop and promote the accountancy profession in the region in support of the socio-economic enhancement of the AFA member countries
    • ASEAN Federation of Accountants
      AFA’s strategic objectives:
      Strengthening AFA institutional capabilities
      Supporting capacity building of member institutions
      Championing specific issues which would promote the standing of the accountancy profession within the ASEAN region