Asean Economic Community And Opportunities For Accountants And Professional Service Providers

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Information about Asean Economic Community And Opportunities For Accountants And...
Business & Mgmt

Published on October 10, 2009

Author: hasyudeen



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

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

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