Law firm identifies trade challenges in emerging Asia

Eduardo Leite

MANILA, Philippines—The recent economic upswing seen in Southeast Asia has led to a surge in foreign investors out to take advantage of the opportunities that abound in the region.

International companies are confident of the growth potentials, especially among the members of the Association of Southeast Asian Nations (Asean).

But the same companies are now facing challenges, particularly in dealing with the Asean market.

“There are challenges in doing business outside of one’s jurisdiction,” says Eduardo Leite, Baker & McKenzie’s chairman of the executive committee.

Leite says that more and more issues—of changing laws, political issues, competitions, regulations that are getting stricter by the minute, whether it’s for financial services or environmental issues, or labor employment—are emerging.

These companies may find it difficult to operate in a trade environment so different from their home countries.

And that is where Baker & McKenzie comes in.

Baker & McKenzie, a legal advisor of top international companies, tries to address these concerns by drawing on their wealth of experience on the world stage.

Because it retains local lawyers in every country and office it has a relationship with—allowing clients to feel more at ease in dealing with solicitors they can relate with—the law firm has enriched its own global perspective by soaking in the cultures and languages of their client base.

And because of its international reach, the law firm can connect clients to wherever their concerns lie, be it in the Asia-Pacific, North America, Europe, or elsewhere, Leite says.

International companies, especially new ones, are having a hard time investing outside more established markets like Europe, North America, and Australia. But the companies need to set their sights on the emerging world, which economies continue to grow.

The competition has moved from the established markets to new, emerging ones like India, China, and the Asean communities, apart from Africa and South America, where the opportunities in infrastructure, telecommunications and energy abound.

“The real competition is in the emerging world. And the emerging world has challenges. One of the top issues that concerns a multinational company in any part of the emerging world is the stability of the legal system. For business, it is essential that the laws, the regulations—whether it’s for security, safety, quality or environmental—are stable and the court system apply consistently. Instability of contractual relationships doesn’t help business,” Leite explains.

In the Asean, member states are trying their best to harmonize laws across the region. But the complex foreign investment regulations and trade barriers continue to dampen international companies’ confidence in doing business in Southeast Asia.

“Another challenge is … events that interrupt the supply chain, natural events that are beyond our control. For example, the flood in Japan affected their automotive industry, which affected the supply of materials all over the world,” Leite says.

Another challenge is security.

“Take the oil situation in Libya,” he says. “The companies are concerned with the security of their employees, the quality of their products.”

There is also cyber security, where hacking, espionage, privacy laws and security of information fuel the concerns of companies operating abroad, he adds.

Despite these barriers, most international companies remain confident in the growth potential of the Asean market.

Baker & McKenzie believes in the enormous opportunities Southeast Asia offers its clients and for the firm itself, as they navigate the complex legal environment across the region.

To maximize the opportunities in the region, policies promoting competitiveness and innovation must remain a top priority, alongside prioritizing the development of human capital by improving the quality of education and ensuring access to connectivity, whether this be through technology or infrastructure, Leite says.

“We are where our clients need us, whether it is in South America, London, or in Asia. We help our clients anticipate and address nuances of local markets as they pursue their global investments,” Leite explains.

International law firm Baker & McKenzie celebrates its 50th year in the Asia-Pacific by gathering in Manila its top partners from branches throughout Asia.

With over 4,000 lawyers in 45 countries, Baker & McKenzie has established itself as one of the top law firms globally, advising the most successful business organizations, some of which has successfully ventured into the Asia-Pacific market.