The countries of the Association of Southeast Asian Nations (ASEAN) have a combined GDP of $2.4 trillion, 630m inhabitants (twice the number in Europe), a growth rate of 5.2 per cent (when the global average is 3.8 per cent) and a youthful population (27 per cent under the age of 15).
So it is unsurprising that Gianluca Cugno, head of Intesa Sanpaolo’s International Department, describes them as “increasingly interesting and important”.
“This is in effect the sixth global economy,” he says. “It is well connected to global supply chains and has reducing levels of bureaucratic obstacles and tariffs. We as a bank – looking to finance deals – and our Italian clients – looking to expand and innovate – must be there,” he says.
Deepening strategic coordination and continuing growth and development across the ASEAN nations – now numbering 10 – are presenting opportunities for international investment to expand, with Intesa Sanpaolo’s clients well placed to play a role.
“The sectors that have seen the biggest development in recent years are infrastructure, manufacturing, natural resources and services, as is usual in growing economies. These are areas where Italian companies have real expertise,” says Cugno. The result, he continues, is that Italian producers and suppliers “are in a position to help these countries move industrial production to more competitive levels”.
Key to the bank’s success is its broad but nuanced understanding of the region. “There are two faces to the same coin,” says Cugno. “It is important to have local presence to identify opportunities and communicate most effectively with stakeholders, but also to appreciate the wider context.”
Intesa Sanpaolo’s South-East Asian structure provides just such a dual lens. The Singapore branch – established in 1984 – offers coordination and agility for activities across the ASEAN area. It also operates through Intesa Sanpaolo representative offices in Indonesia and Vietnam, with key support from the Hong Kong hub.
“The sectors that have seen the biggest development in recent years are infrastructure, manufacturing, natural resources and services, as is usual in growing economies. These are areas where Italian companies have real expertise”
Gianluca Cugno, head of Intesa Sanpaolo’s International Department
“We want to become the absolute reference point for Italian companies in the area,” says Cugno. “Physical presence gives us a competitive advantage, keeping us closer to our clients – both local and Italian – and granting access to projects which might not otherwise be open to international involvement.”
This, he explains, means Italian companies can move beyond simply supplying local industries to developing local production and in turn local sales.
Of particular interest as individual economies, Cugno highlights Singapore, Vietnam and Indonesia – with each offering different possibilities.
Singapore’s well-developed service-based economy – rated AAA – is fundamental to facilitating Intesa Sanpaolo’s roles in financing and products (particularly trade and export finance, structured export finance and structured finance).
Among Intesa Sanpaolo’s recent deals in the ASEAN region, Cugno cites the bank’s role as arranger for the five-year loan of $660m to Star Energy Geothermal – a subsidiary of Star Energy, Indonesia’s largest geothermal power company.
The Indonesian energy sector – boosted by rising raw material prices – and Vietnam’s manufacturing sector are both strong and growing, with the resulting infrastructure required in each country creating increasing international investment opportunities.
“All this points to an acceleration of economic development,” says Cugno. In due course, he adds, the development of service industries in these countries will present further possibilities.
Also of great significance in the longer term is the development of China’s ambitious and far-reaching Belt and Road infrastructure initiative. It will provide a valuable boost for surrounding countries as well as a mutually-beneficial strengthening of links, says Cugno.
Key to the bank’s success is its broad but nuanced understanding of the region
Ratings agency Fitch this year reported that projects together worth $900bn were under way or planned. “Clearly there will be a need for huge amounts of financing and mobilisation of capital and we expect our Singapore branch to play a very important strategic role,” he adds.
“We are ready to follow the projects, from the construction of an industrial plant to a transport infrastructure or anything else. This should be a win-win situation across many countries, many sectors – and we want to be a key player.”
“Physical presence gives us a competitive advantage, keeping us closer to our clients and granting access to projects which might not otherwise be open to international involvement” – Gianluca Cugno
As Intesa Sanpaolo continues to build its international network, the development of this part of the world, both as an increasingly confident and organised group of countries and as a network of growing individual economies, is a prospect Cugno finds challenging and exciting.
“I look forward to working ever harder in this area. We have an opportunity to ensure that our Italian clients find the best conditions and, very importantly, to move further towards our own truly global organisation.”
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