Merger and Acquisition in ASEAN
In terms of growth, the ASEAN economies as a whole have been very impressive. For example, the region has been identified as one of the world's fastest growing. Interestingly, six of these countries, namely Indonesia (ranked 16), Thailand (ranked 24), the Philippines (ranked 33), Singapore (ranked 36), Malaysia (ranked 37), and Vietnam (ranked 42), were among the top 50 countries in the world in terms of GDP growth in 2020, while the remaining four countries were ranked between 70 and 136. (World Bank, 2021). Furthermore, each country determines its own macroeconomic policies, which appear to be identical in certain aspects. While the central banks of Indonesia, Malaysia, and Singapore cut their policy rates, the central banks of the Philippines, Thailand, and Vietnam kept their current low policy rates. This has ramifications for enterprises involved in mergers and acquisitions, as continuous economic development and low interest rates mean that corporations will be able to finance agreements with inexpensive loans.
Seo (2020) stated that from 2010 to 2015, ASEAN's average growth rate was 5.4 percent, whereas the global average was 3.0 percent. ASEAN has become a desirable economic market for trade and investment due to its comparatively high average growth rate. Global FDI inflows grew from 1.6 percent in 2000 to 11.5 percent in 2018, an increase of more than tenfold over the same period. AFTA transforms the ASEAN economy by removing trade obstacles and establishing a strong regional market. In fifteen years, AFTA, as a gradual liberalization trade deal, has successfully decreased intra-ASEAN import tariffs by 5%. Therefore, over the last two decades, the number of cross-border mergers and acquisitions (M&As) in ASEAN has steadily increased (Yokitaki and Kashijuku, 2016).
A study by Metwalli and Tang (2009) on acquisition deal in Southeast Asia in a long period between 1990-2007 shows that Malaysia has the highest number of deals from 5 to 1285 deals; followed by Singapore from 13 to 1,103 deals; Thailand from 0 to 527 deals; Indonesia from 0 to 188 deals; and the Philippines from 1 to 176 deals. Kingkaew (2019) mentioned that between 2014 and 2017, net cross-border M&A sales in ASEAN increased by 124 percent to USD 16.7 billion, helping the region attract more foreign direct investment (FDI). This has increased by more than five times since the beginning of the era, when it was only USD 5.6 billion. The majority of the transactions (60%) took place in Singapore; Indonesia and Malaysia were the second and third largest M&A markets, respectively. The growth in cross-border M&A sales was attributed to a considerable increase in asset acquisitions by developed-country MNEs, which increased from -$4.2 billion in 2016 to $9.7 billion in 2017, as well as an increase in the average deal value. Despite the growing number of cross-border mergers and acquisitions in ASEAN, a large proportion of M&As fail to complete.