AEC - 2015 & beyond

with DBAV Executive Director, Hyunju Park (middle) and DBAV Chairman, Remco Gaanderse

with fellow-panelists in the dialogue with the audience

ASEAN leaders adopted the ASEAN Economic Blueprint in 2007 to be the masterplan for the establishment of the ASEAN Economic Community (AEC) by 31 December 2015 and eventually a full-fledged ASEAN Community by 2020.

Recently, the Dutch Business Association Vietnam (DBAV) organized a luncheon talk, under the name "ASEAN Economic Community - 2015 & beyond" in Ho Chi Minh City. 

In my 45-minute talk, I outlined both the achievements thusfar and the challenges still ahead. Although the ASEAN-6 states (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) have managed to make significant progress on import tariff eliminations and the easing of foreign investment regulations, the other member states (Cambodia, Laos, Myanmar and Vietnam) are lagging behind and need till at least 2018.

Intra-ASEAN trade stands at around 25% and cross-border M&As at around 9%, with Malaysia, Singapore and Thailand as frontrunners. This relatively low figure (which, off course, excludes major investors (and non-ASEAN states) China and Japan), however, will rise, due to the fact that, in particular, the cross-border investments into Myanmar have risen dramatically in 2014 and will continue to do so in 2015. 

Sceptics have pointed out that economic disparison between member states will prove to be a major hurdle in realising a true AEC. But even within the EU, there is still a large economic divide between the Nordic countries and Eastern Europe member states and the fact that a powerful economy like Germany plays a leading role in the Union (as Singapore, Malaysia and Thailand do in ASEAN), is not necessariy a bad thing. While ASEAN multinationals have been engaged in cross-border investments for quite some time, the AEC will, in particular, open doors for SMEs of, for example, tech-savy young Vietnamese and Indonesians to take on cross-border adventures.

Is 31 December 2015 a deadline ? No, it is rather a milestone in the work in progress, which is called "ASEAN Community". 

Read DBAV's comment

This article appeared earlier in e-magazine Business Trends Asia 

China cross-culturally aware

Sheriff Aligbeh of Clever Culture Communication at Addax in Geneva

Coca Cola, Disney, and more recently, Starbucks……, over the years, Western marketeers have successfully  “sold” lifestyle concepts around the world. Curiosity coupled with creativity have layed the foundation for the penetration of new markets and the establishment of true global brands.

Only recently, Asian brands have begun to conquer the world. After earlier Japanese and Korean successes in the automotive and electronics sectors, now a broader range of consumer goods from Asia are entering Western markets. 

Over the past decades, outward looking Western marketeers have researched consumer behaviour and trends in other parts of the world. In the  Sixities of last Century, Dutch social psychologist, Geert Hofstede, developed a cross-cultural theory covering cultural values and behaviour in various regions and nations. Although, these so-called “dimensions” may be quite stereotyping and outdated nowadays, they did mark the beginning of trying to understand what drives the different peoples around the world and are embraced by the Western business community to this day.

However, the world is changing. Cultures are not static, but are constantly evolving, in the past 50 years even more rapidly than ever before, being influenced by urbanisation, economic development, technology and globalisation. People’s behaviour and even the values driving this behaviour are changing as years and generations go by.

Asian investors are beginning to understand that it takes more than just money to run viable businesses elsewhere and that some investments abroad may turn out to be a failure. In the West, we have learned to deal with financial setbacks and divestments the hard way. 

Chinese oil giant, Sinopec, in 2009 acquired Swiss-based Addax Petroleum. Both Addax’s Chinese and Swiss executives are obliged to enroll in cross-cultural training programs on Africa, one of the company’s core regions. As part of this cultural awareness initiative roll-out, Sheriff Aligbeh, Nigerian-born, Netherlands-based cross-cultural consultant and founder of Clever Culture Communication, is regularly in Geneva to conduct training programs on African cultures for Addax. Clever Culture Communication creates and delivers tailor-made cross-cultural (business) solutions to corporate and public sector organizations operating in the Sub-Saharan African region. 

"There seems to be a clear will to invest in educating employees on African cultures, but also other value systems, in order to encourage dialogue and an open approach to differences", says Aligbeh.

Last year, affiliate of the Royal Tropical Institute in The Netherlands, KIT Intercultural Professionals, opened an office in Shanghai. Within one year of operation, in which it served multinationals active in China, its Chinese daughter company will now run cross-cultural training programs for Chinese clients for the first time. Chinese companies with overseas investments and universities with exchange programs in, for example, the U.S., recognise the need to prepare their managers and students for their business dealings and social life abroad. 

 

Shanghai-based Wendong Deng (far right) is heading KIT Intercultural Professional's China operations. Also pictured (from left to right): Jolande Zeeman, Senior Trainer, KIT Intercultural Professionals and Heleen Agterhuis,  Managing Director, KIT Intercultural Professionals
This article appeared earlier in e-magazine Business Trends Asia 

Faded glory.....

As stated on her birth certificate, my wife Isti carries the title “Raden”, for what it’s worth. Her mother, Raden Johanna Nana belonged to the Boeldansyah family from Bandung and her father Raden Achmad Memed to the Kartaredja family from Garut;  Soendanese (Sundanese) “Raden”, old nobility, so to say.

Those were the days, when royalty and nobility had a place in Dutch-Indonesian society and the early years of the independent Republic. Decades have since passed and nobly titles such as “Raden” have lost their meaning.

Only in Bandung’s Cibogo area, where the Boeldansyah family graveyard is located, traces of the family’s old status are still found and family members, including my wife, are still greeted by its residents with the utmost respect and to this day addressed as “Raden”.

Our children, however, can no longer carry the title “Raden” as I am a “commoner”. That means no Raden Robert Putra van den Broek, nor Raden Anna Nadhira van den Broek !

Isti's mother, Johanna Boeldansyah (bottom left) with siblings

Isti's grandfather, Otong Boeldansyah and grandmother, Maemoenah, with children and staff

Indonesia's new middle-class

Is there a new middle-class emerging in Indonesia? The answer is “yes” and it is not that much different from the kind of middle-class we know in, for example, The Netherlands. Of course, the figures (read: salaries and costs of living) are different, but as far as purchasing power and purchasing behavior are concerned, there are remarkable similarities.

Actually, there are 2 consecutive generations in Indonesia’s new middle-class. First, there are the 55-60-year olds, who have completed their home mortgage payments or those who have inherited a family home. Their children have finished their education by now. And some of these 50-60-year olds have retired and are enjoying a small pension. Although, household expenses for water and electricity are quite high in Indonesia, the total costs of living (burdened by a mortgage and children’s education) have now decreased substantially. As most of this age group are small entrepreneurs as well, they seem to manage to add a decent income to their (low) pension.

What you see is that this group is able to enjoy a true middle-class lifestyle, including frequent travelling, both domestically (with the island of Bali and the beach resort of Pangandaran among the favorite destinations) and abroad, helped by numerous low-cost airlines that continuously offer attractive rates to Bangkok, Hong Kong, Kuala Lumpur, and other cities in the region. Their homes are featuring a minimum of one flat-screen TV, plus one car and several motorcycles in the yard. Again, as far as purchasing power and purchasing behavior goes, not that different from the Dutch middle-class.

The next generation, children of those 55-60 year olds, are now in their Twenties. They have graduated from university and have just started their working career. In this context, think of urban families, think of 20+-year olds in cities like Jakarta, Bandung, Solo and Surabaya. Early-married couples tend to live in at their parent’s the first year, or two, of their marriage, saving for the next step, which is buying a house or apartment. They go out for dinner and see a movie every now and then, all things a middle-class does.

These middle-class youngsters are each earning somewhere between 2,5 – 4 million Rupiah (US$205 - US$328) a month. Being married and not yet having kids enables them to buy a small property on the outskirts of the city. A 2-bedroom, 80 m2-studio, for example, requires a down-payment of around 2.2 million Rupiah (US$180,4) and a monthly mortgage payment of around 2.3 million Rupiah (US$188.6) for a period of 15 years.  This new middle-class, however, cannot afford to buy a place in the city center, where prices are much higher.

This new middle-class resembles the middle-class of the generation of the late-Eighties/early-Nineties in The Netherlands, which often goes through the same stages in life. In The Netherlands too, “dinkies” (double income no kids) are the most prosperous among young adults. And in The Netherlands too, there are not many couples who can afford to buy an apartment in the center of a city like Amsterdam, but will end up living further away from the city center, towards the outskirts.  And yes, they go to the movies and they travel too.

This article appeared earlier in e-magazine Business Trends Asia

Mudik and Lebaran in Indonesia

This was the first time I was in Indonesia during Idul-Fitri, or Lebaran, when Indonesians celebrate the end of Ramadan, the Muslim vasting month. I was warned that travelling in the days around Lebaran would be hazardous as millions of Indonesians are leaving the cities to go home to their home towns to celebrate the occasion with family members.

This massive exodus is called "mudik" or, jokingly, "pulang kampung" (going home to the village). When American President Obama visited Indonesia in November 2010, one of the few words Bahasa Indonesia he remembered was pulang kampung, he was saying in his speech at the Universitas Indonesia (UI). A big round of applause and laughter followed.

As it is in Thailand during Songkhran (Thai New Year) in April, when millions of Thais are leaving the capital of Bangkok to travel upcountry, the Indonesian capital of Jakarta is virtually empty during Lebaran. No traffic jams this time, but deserted streets. Even the ever-crowded, numerous shopping malls in the city are quiet. The only people visiting the malls are the Chinese, who, largely being Christian, do not celebrate Lebaran.

In 2011, the Indonesian government made the mistake of, at the last moment, declaring Lebaran officially on August 31st, while neighbouring Malaysia, Brunei and Singapore marked a day earlier, August 30th, as the official day which ended the vasting month. This caused confusion and even anger among Indonesians as they had to postpone their planned celebrations with another day.

As a result that year's mudik became even more chaotic as travel plans had to be changed overnight. Popular mudik routes such as Bandung-Garut and Bandung-Subang, which are usually 2-3 hour journies, became 8-9 hour nightmares with an endless stream of cars and motorcycles filling up the roads.

In the days leading up to Lebaran I was intrigued by seeing people offering packages of brand new bank notes for sale along the street. I was told that, as it is custom to hand out money to small children within in the family during Lebaran, one prefers giving new crispy bank notes over old fumbly dirty bank notes. Creative as Indonesians are, for a few extra Rupiahs you can buy packages of new bank notes from these street vendors!

This article appeared earlier in e-magazine Business Trends Asia

Love and marriage in Indonesia

Although Indonesian society has dramatically changed over the past few decades, it still remains a traditional one with a wide variety of rituals and social and culturally-determined customs. Even today, in more modern Indonesia, youngsters struggle with issues related to, for example, love and sex.

In a traditional, family-oriented society like Indonesia, boys and, in particular, girls, are supposed to refrain from sex (read; intercourse) until they are married. The vast majority of Indonesia's youngsters not only accepts, but also completely agrees with, this situation and voluntarily obeys by this rule. The ultimate goal of a love affair is getting married.

This is not specific Indonesian, however, but applies to most countries in Asia. But in Indonesia, predominantly in Sundanese (West Java) and Javanese (Central and East Java) culture, lovers have to deal with one extra condition; Indonesian young women and young men have to respect their elder sibling(s) when it comes to marriage. This means that a young woman or man can only marry when her/his elder sibling is already married. In order not to "embarass" her/his older sibling, the younger one has to wait until the older one is "safely" married.

What is the implication of this condition ? It can have a dramatic impact on the lives of young men and women in Indonesia and may even result in broken-off love relationships out of respect for older sisters. This especially applies for highschool or college love affairs whereby lovers may have to wait for several years, sometimes even a decade, before being "allowed" to get married.

Lovers may have to end their relationship because an older sibling is blocking the way to their marriage. Keeping the other "on a string" would not be fair. Instead, breaking off the relationship will set the other free and create new, better chances, for a love relationship that doés have the potential of resulting in marriage. Occasionally, however, the younger brother or sister does get the green light after having asked the older sibling special permission to marry first.

This article appeared earlier in e-magazine Business Trends Asia

Coming up in April and May...

3 April: Amsterdam University of Applied Sciences
Workshop on “Added Value of Dutch Graduates in Asia”,
at Career Day


18 April: Royal Tropical Institute, Amsterdam
Training on Social Culture in Singapore


25 April: Chamber of Commerce Amsterdam
Consultant Southeast Asia at Consult Day Asia-Latin America


2 May: Royal Tropical Institute, Amsterdam
Training on Social Culture in Singapore


16 May: Mead Johnson, Nijmegen
Workshop on Social Culture in Thailand and the Philippines,
in association with the Royal Tropical Institute


21 May: Netherlands Council for Trade Promotion /
Dutch Development Bank, The Hague
Guest speaker at seminar “Sowing the Seeds of Success in Southeast Asia”

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For more information, Business Trends Asia