Local ASEAN firms are expanding, while the internationals also want a taste of the action promised by the planned regional economic union
As global investors diversify away from its northern neighbour China, the South-East Asia market is the new favourite. Fuelled by increasing foreign investment and a promising single economic community proposed by the Association of South-East Asian Nations (ASEAN), the region’s legal markets have seen the most exciting developments.
Indigenous firms’ expansion in the region is the hallmark of the past year. Apart from Singaporean firms, many other Asian firms are following their clients into the Southern markets. Japanese firms are leading the charge, as Japan is among the largest foreign investors in the region. Last year Japan invested $23.6bn into the ASEAN region, more than double the $10.7bn invested in 2012. All of that country’s five biggest firms now have offices in Singapore and Yangon.
Strong Asian investment inflow has also benefited local legal advisers – ZICOlaw, a regional legal services network headquartered in Malaysia, being one.
The firm has been busy with clients’ joint ventures, foreign investment matters, bidding processes and infrastructure projects across the ten member states. Recently it was involved in a project to expand Yangon International Airport, the country’s main air gateway. It is acting for a consortium led by Pioneer Aerodrome Services, which will carry out the development.
“Our growth focus is not on Malaysia but the region. We see great opportunities in countries such as Myanmar, Vietnam and Cambodia,” says Chew Seng Kok, managing partner of ZICOlaw, which now has offices in eight ASEAN countries.
Although Thailand is suffering a period of political instability, the 125-year-old Bangkok-based Tilleke & Gibbins achieved a 10 per cent revenue growth in 2013 and is expecting a bigger increase this year. Co-managing partner Darani Vachanavuttivong attributes this to the firm’s diversifying practice areas and expanding network.
The firm has been investing in insurance for some time, and it has started to make good returns. Last year it strengthened the offering by hiring former assistant general counsel for AIG Asia Pacific Aaron Le Marquer as a consultant, and former Deacons partner Michael Turnbull as an of counsel.
IP is a traditional core practice of the firm, but it is extending its services to new areas such as TMT, digital content and life sciences.
In terms of regional coverage, the firm added three offices in 2013, one each in Indonesia, Laos and Myanmar. These additions complement its long-standing Vietnam presence. Unlike its full-service HQ, Tilleke & Gibbins’ regional offices mostly focus on IP matters.
“We’d like to be a South-East Asia player and serve our clients’ needs across the region,” says Vachanavuttivong.
She adds that 90 per cent of the firm’s clients are foreign companies – mostly Western ones – such as Pepsi, Starbucks, Electrolux, Lacoste, Novartis, GSK and Pfizer, but there are also a good number of Japanese clients.
SyCip Salazar, the largest firm in the Philippines, also had a busy year last year. As banking and finance department head Mia Gentugaya says, “the country is going through a period of relative calm and its economy is generally doing well”.
“There’s been a lot of activity in infrastructure, such as airports, trains and metro transit systems,” says Gentugaya. “More schools and hospitals are being built.”
Among many transactions the firm is involved in the Mactan-Cebu International Airport expansion project, with a value of $400m (£240m).
Capital markets work – debt offerings and IPOs – and litigation also contributed strongly to the firm’s business last year.
However, Gentugaya points out that the firm faces a problem in growing lawyer headcount.
“We recruit up to 25 law graduates each year and are lucky if a third stay on at the end of that year,” she says. “We’ve also seen strong growth in the number of boutique firms in recent years. Partners often leave big firms to set up their own specialist practices.”
Firms in Indonesia, the biggest economy in the ASEAN area, are facing the same challenges as their peers in the Phillipines. The country’s largest firm, ABNR, one of the Top 100 last year, dropped out of this year’s ranking, as its lawyer numbers fell by 10, to 101.
Like their Asian counterparts, many international firms, largely from the UK, are also trying to enlarge their regional coverage in a bid to seize the opportunity of the 2015 ASEAN Economic Community. But opening an office in each of the emerging markets appears to be risky and slow, as most opt to enter into local alliances.
Most recently, Bird & Bird has added Indonesia to its pan-Asia network by signing strategic agreements with two Indonesian firms, IP boutique K&K Advocates and five-partner firm Nurjadin Sumono Mulyadi & Partners.