ASEAN Community -a Historical Moment!



The ASEAN Community (AC) will come into being on 31st December, 2015 a landmark achievement for the 48-year-old regional association whose member countries have wide diverse social, economic and political backgrounds.

The community will be larger in terms of population than the European Union or North America, and could rival India and China in the years to come. The 10 Asean leaders inked the historic declaration yesterday that entails greater integration of the region of over 600 million people.

The regional community is a monumental effort by every regional member country to bring their nations closer through greater economic integration and social uplift, while ensuring the region remains secure and stable.


Prime Minister Datuk Seri Najib Tun Razak said the idea of a community started in Bali 12 years ago, followed by blueprints and action plans.

“And today, on behalf of Asean member states represented at the 27th Asean Summit here in Kuala Lumpur, it is my solemn duty and privilege as the chair of Asean 2015 to pronounce the establishment of the Asean Community on December 31,” he said at the signing of the Kuala Lumpur Declaration on the Establishment of the Asean Community.

At the event, Malaysia and the leaders of the nine other Asean nations – Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam – also signed the Kuala Lumpur Declaration on Asean 2025: Forging Ahead Together.

Six of the grouping’s eight dialogue partners – Australia, China, India, Japan, South Korea and Russia – as well as United Nations secretary-general Ban Ki-moon were present.

The AC comprises three core pillars, namely the Asean Political Security Community (APSC), Asean Economic Community (AEC) and Asean Socio-Cultural Community (ASCC).

Najib said Asean would now have to ensure that a truly single market and production base was created with more free movement of goods and services, as this – having common product standards, greater connectivity and removal of trade barriers – would be one that was primed to expand.

“As it is, our combined GDP is expected to reach US$4.7 trillion (RM20 trillion) by 2020. According to one forecast, Asean has the potential to be the fourth largest economy in the world as early as 2030, which is only 15 years from now."

The AC goes beyond economy, said Najib, pointing out that it is also about recognising the special ties that bind the people and “making our citizens feel that Asean courses through their veins.”

“Our Asean Way has guided us and will continue to be our compass as we seek to realise a politically cohesive, economically integrated, socially responsible and a truly people-oriented and rules-based Asean,” he said.

“It is important that we list down some low-hanging fruits that can be delivered every year until we reach 2025, which is at the end of the 10-year blueprint under the Asean Community,” he said.

/theSTAR 23-11-2015


Disclaimer: Views or opinions expressed are solely those of the Author and should be used with discretion. The Author shall not be held liable for any acts or omissions arising from the use of the information. The user will be personally liable for any damages or other liability arising hereof.

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Hard times like this: Part 2 ...



There are always opportunities in a gloomy economic situation for Companies that have established business plan, processes and strong management.

With the Malaysian Ringgit weakened against its trading partners, export oriented Companies will have more demands on their goods. The strong foreign currencies will make Malaysian goods very affordable and competitive for the importing Countries.

Depending on the percentage of the domestic components in the product content of the Malaysian exporter Company, the profit margin will vary.

A Company which have a high local content, which are purchased in the Ringgit, will definitely have a higher profit than those that have lesser when the payment of the goods are paid in the foreign currency particularly the USD!

The USD currency is the global dominant trading currency. Depending on the foreign currency traded Companies will enjoy different percentage/value of forex gain.

Companies may convert the foreign currency immediately upon realisation of payment. Some may "deposit" the receivables in forex account for future payments in foreign currency.

Companies that are highly impacted by the USD may also consider that their future trading transactions should be a mix of  foreign currencies rather than on a single currency as each currency have different impact on the Ringgit.

For Companies that are not export driven, but have opportunity to do so, may have to embark to do so, in order to have a healthy revenue stream of domestic and foreign earnings.

With the dynamism and changing world economy and the expected introduction of the TPPA, whether the Country is a signatory to or not, in a short few years, the challenges of the world trading system will see great paradigm shifts and business behaviour.

Thus, this present situation, is a glimpse of what could be expected in the years to come where the geographies of the world are intimately linked and flattened with almost borderless, equitable and fair, may be deemed distorted in some smaller economies, trading environment.

Let all Malaysian Companies be prepared ...

/07-11-2015

Disclaimer: Views or opinions expressed are solely those of the Author and should be used with discretion. The Author shall not be held liable for any acts or omissions arising from the use of the information. The user will be personally liable for any damages or other liability arising hereof.

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Hard times like this: Part 1 ...



In a difficult and challenging economic situation, whatever the reasons, there is an indeed a moral obligation, for organisations to reach out and help relief the economic burdens of the citizens of the Country to the best of their abilities.

There is uncertainty as to when this economic plight would come to a landing.

Malaysian consumers are burdened with price hikes for almost all of their basic needs with the introduction of  GST (Good & Services Tax) in April 2015. They are now more careful and selective in their spending. There is an erosion of their purchasing power. Many are now "buying when necessary and in smaller quantity", resorting to more "eating at home" and taking other measures to stretch and conserve their dwindling ringgit.

The business community is also facing difficult moments with revenues affected with the weakening of the Malaysian Ringgit against major trading currencies. Their cash flow is also affected with the  introduction of GST (Good & Services Tax) in April 2015.

The Country's economy is no better with low crude oil and commodity prices.

On the whole, everyone is adversely affected.

To be sustainable, importers and domestic businesses, must be able to generate adequate revenue, with decent profit margin, to keep afloat until the worse is over. The following, general and basic action plan, not exhaustive, could be adopted either singly or otherwise, on a temporary basis until a more permanent or better solutions be found:

1) business must absorb some incremental cost and thus accept a lower profit margin. If absolutely necessary, have a minimal price increase as well.
2) negotiate with foreign Suppliers for lower cost of goods to tie over this difficult moment. Or offer more "free goods" or price discounts with purchases.
3) review your other purchases of goods and services for efficient inventory and pricing control eg stationery, logistic deliveries
4) negotiate to share cost with your local trade partners by lowering their profit margin.
5) reduce or discontinue samples, free goods or bonus to your trade partners
6) get professional advice on hedging your purchases. Get close to your Bankers.
7) get additional financial facilities from your Banks if you have to.
8) improve on your account receivables ie reduce credit days. This will improve liquidity and reduce bank borrowings in order to enhance financial  performance.

Laying staff should not be in the equation. In fact they are great assets to help you go through this period of uncertainty. Effective leadership is the key to drive business continuity.

/06-11-2015


Disclaimer: Views or opinions expressed are solely those of the Author and should be used with discretion. The Author shall not be held liable for any acts or omissions arising from the use of the information. The user will be personally liable for any damages or other liability arising hereof.

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