Citi Treasury and Trade Solutions
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Brimming Growth Drivers
With inflow of foreign direct investment (FDI)
reaching USD122 billion in 2013, combined
population of 600 million with burgeoning middle
classes ready to spend, and a booming economy
anticipating ASEAN’s collective GDP to grow at
about 5%
1
, ASEAN is a huge pie for insurers to
grab given its low insurance penetration rate
2
.
AEC: the Next EU?
The allure of creating a single market to attract
business flows and achieve economies of scale
is not hard to see.
However, unlike nations branded under the
European Union (EU) using a common currency,
ASEAN relies on coordinated efforts among its
member states and lacks a central bureaucracy
similar to that of the European Commission to
execute policy changes swiftly from the top down.
As a result, key measures to level the insurance
industry’s playing field, such as opening up the
markets for foreign entry and converging
varying regulatory standards, has largely been a
work in progress.
Navigating the AEC Landscape:
Strategies for Insurers in ASEAN
As we usher in 2015, the clock is counting down to the ASEAN Economic Community’s (AEC)
grand goal to achieve regional integration by the end of the year. Whether the deadline can be
met or not, the game plan to transform ASEAN into a land with free-flowing goods, services,
investment and talents has already set the momentum going as global and local insurers reposition
themselves to capture promising opportunities from the world’s fastest economic engines.
Damian Macinante
Asia Pacific Non-Bank
Financial Institutions
Sector Head
Treasury and Trade
Solutions, Citi
1
“Economic Outlook for Southeast Asia, China and India 2014: Beyond the Middle-Income Trap”, OECD Development Centre and
ASEAN Secretariat, 2013. ASEAN’s GDP is projected to grow at 5.4% from 2014 to 2019.
2
According to Fitch Rating data, up until 2012, insurance penetration rates were below 6% for several ASEAN member states,
such as Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam.
