Global Managing Director (Board of Managing Directors), Roland Berger Holding GmbH
Malaysian Palm Oil Forum (MPOF) 2024: Interview with Denis Depoux
Current geopolitical conditions as well as new regulations have upended numerous global trade conventions.
In this brief interview with Denis Depoux, Global Managing Director of Roland Berger, during the Malaysian Palm Oil Forum (MPOF) earlier this year, we asked his take on several trade issues such as EU Deforestation Regulation compliance advantages, #China as an alternative market, as well as the prospect of Southeast Asia's growth in a world that is increasingly reliant on bilateral agreements.
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Transcript (10 segments)
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Denis Depoux0:10
I think compliance comes first. As was discussed during the meeting today, I think just waiting to comply will inevitably lead to losing competitive advantage in the future. So working towards compliance, demonstrating it, documenting it, actually making some communication out of it is the first step.
Then I think new globalization entails a lot of agility needed to be able to cope with the unexpected, because I think what we've seen in the last two or three years is that there's no such thing as a stable regulatory framework. There is no such thing as everybody abiding by the rules, simply because we're gradually leaving a rule-based world into a world where there are bilateral agreements, there are exceptions, there are people not playing by the rules.
I think for a business, again, being compliant is necessary, but not being naive about compliance and the pace to comply is also important. It's a matter of commitment. So being compliant yields competitive advantage, and I would still advocate being compliant, particularly to EU regulation, as a key competitive advantage and being ahead of the curve to simply outbeat those players that will try to avoid compliance until things get better. But things will not get better.
I think it's in the current trade environment. Again, compliance is necessary. It's creating a whole ecosystem around digitization, around making information available, which has its challenges around data privacy, around also the conflicting regulation between what in this case the EU is asking and potentially local regulation that prevents companies from sharing information.
I think one important step is also engagement, to simply make sure that all stakeholders engage with each other and that regulation is adopted. As I was mentioning during the conference opening speech, the EU always has a very institutional approach, so it's not driven by ideology. It's driven by an institutional move towards a better world, towards setting a standard. And I think engagement in this case is always possible, negotiation is always possible, and we see it from the history of trade relationships between the EU and other countries.
Generally speaking, in the last few years, in the last decade I would say, China has been quite often ahead of the curve in terms of generally environmental regulation and climate regulation. Of course, the starting position being what it is, they may need more time to actually comply, and we see it on CO2 emissions obviously. But we clearly see that there is a willingness in China to actually make high environmental standards as a competitive advantage on the world scene.
China is powerful enough with its economy, with its exports, with its technology to actually set standards. So in a way, I would not say it's following the European path, because I don't see that China as a nation would see it like this, but it's a similar direction for similar reasons.
Europe is willing to set standards and send a message to the world, for example with CBAM or with EUDR, that it's setting a standard and it expects whoever wants to access the European market to actually follow the standards. And in a way, China is doing the same out of the same economic might. You can think of Europe as a huge market for many exporters in the world. China, in a way, is also a huge market and is following a similar route.
I think ASEAN will keep not only being resilient but actually having higher growth than other parts of the world, simply because it cumulates two advantages. Asian nations are exporting nations, so of course their success will fluctuate depending on global demand and the global economy. But generally speaking, they are there to serve global demand and they will basically strive because of this.
But also because of their own domestic market with additional wealth created and additional ability to buy, and basically elevation of domestic consumption, and that's basically fueling even more added value. So I would definitely see ASEAN still thriving in the next decade. In terms of what it needs to do and what Malaysia needs to do, it's as much as possible in selected industries shifting from primary production to production of intermediate goods, shifting from goods to services. So it's basically moving up the value chain towards more added value.