Facilitating borderless | The Star


MORE than ever, companies must heed the pressing call to go beyond borders to seek opportunities within markets that possess strong potential for growth.

Despite uncertainty caused by the Covid-19 pandemic and its associated economic repercussions, overseas markets such as Asia remain key to growth.

As trade tensions between the United States (US) and China continue, companies are eyeing countries in Southeast Asia to establish or expand their sourcing, selling or operations within the next six to 12 months.

In addition, positive progress for the Regional Comprehensive Economic Partnership will eliminate tariffs on 91% of goods and introduce rules on investment and intellectual property to promote free trade, enable wider market access and in turn, fuel an increase in trade volumes within the Asian trade corridor.

According to Standard Chartered’s Borderless Business study, Malaysia is ranked as the second most favourable country in the region for European and US companies, having attracted RM81.9bil in foreign direct investment for 2021 thus far, as compared to RM64.2bil in 2020.

That said, Standard Chartered Malaysia’s corporate, commercial and institutional banking client coverage head Mak Joon Nien highlights a shift in the key priorities and concerns of corporations when entering new markets.

He shared, “In the past, sourcing funding and managing liquidity, as well as managing foreign exchange risks, would be key concerns. What’s interesting is that we’re now seeing understanding regulations and building relationships with suppliers and supply chain logistics as emerging priorities.

The survey revealed that 35% of all the survey’s respondents cite understanding regulations as the number one challenge, while also listing working capital optimisation as a key concern.

“A lot of businesses are challenged by market regulations, so you do get a lot of situations where they have an under-optimised balance sheet and there’s a lot of trapped cash in their export markets. Also, a real risk of liquidity impact from the failure of supply chains, which the pandemic has really amplified,” he added.

To succeed internationally thus requires expert navigation of both local and international cross-border challenges that have been further complicated by the pandemic.

Banks and bankers today need to play a facilitating role in easing their clients’ access to new markets to deliver on their priorities and needs, said Mak.Banks and bankers today need to play a facilitating role in easing their clients’ access to new markets to deliver on their priorities and needs, said Mak.

In this regard, financial institutions (FIs) with a global presence can play a facilitating role in easing access to unfamiliar markets and alleviating such challenges their clients face.

It is crucial for businesses to have a banking partner that understands global regulations and challenges, not just what’s happening domestically. FIs can help to fund international growth amid market volatility and liquidity constraints,

As the only international bank present in all 10 Asean countries with presence in two-thirds of the Belt and Road markets, Standard Chartered is able to appreciate the nuances and diversity of the local markets that it plays in and is thus able to provide its clients with a ‘one bank’ experience through ease of access to expertise, products and services worldwide.

This is invaluable for companies looking to expand across geographical borders, as they can take advantage of its global network, while leveraging the bank’s lending products and other innovative finance solutions to execute complex international operations.

In doing so, Standard Chartered helps local companies – or those interested to expand into Malaysia – grow their footprint and engage in trade in new markets they have set their sights on, by providing end-to-end solutions for efficient capital transmission and reducing the cost of managing funds.

The bank also helps connect clients with the relevant local government bodies to navigate the regulatory landscape in new markets, leveraging its expertise to help clients unlock trapped cash in new markets and working with them on solutions to digitalise their supply chains.

As for advice to businesses keen to build resilience, Mak stressed the importance of digitalisation, particularly the use of blockchain, big data and analytics in boosting efficiency, creating wealth, as well as increasing security of trade and overcoming fraud.

The pandemic has also strengthened focus on environmental, social and governance (ESG) elements, as companies that have adopted good ESG practices have proven to be resilient in times of crisis.

“The corporate landscape as we know it has changed dramatically. Digitalising and complying with ESG are critical to organisations moving forward and these two elements are here to stay.

“In an increasingly borderless world, businesses need to understand [current and future] trends and threats in order to recognise opportunities,” he concluded.

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