The Legal 500 Asia Pacific 2013
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AUSTRALIA
Promising growth in Australia has drawn increased interest from foreign banks and overseas investors; in particular, the energy and natural resources space has prospered. However, the areas of capital markets, M&A, construction, property and projects all remain unsettled as the global crisis continues to take hold.
CHINA
With a slight slowdown in growth, coupled with pricing issues, concerns over Europe and a change of government in process, market confidence has dipped in China. Consequently, closing deals in China has become increasingly tough. Nonetheless, legal practices in China have noted the increased interest of Chinese state-owned enterprises (SOEs) and banks in Europe, where they are looking to buy quality assets at reduced prices due to economic circumstances. Furthermore, China’s demand for overseas energy and natural resources remains keen; and the country’s lawyers have also enjoyed significant activity in the renewable sectors, both inbound and outbound. Standout energy transactions include Skadden, Arps, Slate, Meagher & Flom LLP’s representation of China Three Gorges Corporation on its €2.69bn acquisition of a 21.35 per cent stake in EDP, the largest-ever Chinese investment in Europe.
HONG KONG
As international firms continue to recognise the strategic importance of it as a gateway to China and the rest of Asia, Hong Kong has become a pivotal battleground for pre-eminence in the legal profession.
SINGAPORE
Singapore continues to grow as a regional hub for international law firms to conduct business in Southeast Asia and beyond. There are currently six international firms that hold Qualified Foreign Law Practice (QFLP) licences: Allen & Overy, Clifford Chance, Herbert Smith Freehills, Latham & Watkins LLP, Norton Rose (Asia) LLP and White & Case LLP. The licence allows foreign law firms to practise in commercial areas of Singaporean law, and a second round of issuances will take place in 2013.
SOUTH KOREA
South Korea is making a steady recovery from the financial crisis, as evidenced by a notable increase in corporate transactions and IPOs. It is hoped that the free trade agreement between South Korea and the US, which came into force on March 15 2012, will lead to more robust inbound deal flow.
INDONESIA
Indonesia’s desirability as a foreign investment target has continued to drive growth in this dynamic emerging market, especially where the energy and natural resources sectors are concerned. Other potential high-growth sectors include financial services, consumer-led industries, and also the largely untapped infrastructure sector. Despite this optimism, there remains a lack of regulatory clarity, and recent trade restrictions on the limits of foreign ownership of banks have caused further uncertainty among foreign investors.
JAPAN
Japan saw an increase in outbound transactions, as limited domestic growth opportunities, a strong yen and low interest rates remained prevalent factors in the market. These factors were most noticeable across the industrial and chemical, mining and utilities, technology, pharmaceutical, business services and food and beverage sectors, particularly in the first half of 2012. Another trend has been that of Japanese financial institutions purchasing Western bank assets abroad and expanding operations in Southeast Asia. Law firms have adopted different strategies to cope with the changing workflow – some international firms have downsized their bengoshi capability and are focusing only on core practice areas, while others have retained their numbers but reduced fees. Competition is fierce for mandates, particularly now that the top Japanese firms are keen to take major roles in outbound transactions.
MALAYSIA
Malaysia is increasingly being viewed as a leading capital markets centre in the region, with law firms benefiting from a significant increase in big–ticket work such as the $2.35bn Felda Global Ventures IPO.
INDIA
The Indian legal market is centred on the two economic powerhouses of Mumbai and New Delhi, with further legal and economic hubs to be found in the ‘silicon plateau’ of Bangalore and, to a lesser extent, in Chennai, Kolkata and other cities such as Ahmedabad and Hyderabad. Despite being a vital emerging market and appearing at the vanguard of the BRIC economies, the Indian economy has performed relatively poorly over the past year. This slowdown has caused capital markets and other transactional activity to grow stagnant, resulting in diminished corporate legal activity. Furthermore, foreign investors are often discouraged by the difficulties of the Indian regulatory system. Competition law is becoming increasingly important and several firms are looking to develop their practices in that sector.
NEW ZEALAND
New Zealand is still digesting the full effect of Christchurch’s earthquakes. Unprecedented levels of claims prompted the government bailout of AMI Insurance, and its sale to IAG. Major redevelopment work is planned, and building regulation changes are anticipated.
SRI LANKA
Despite making slower progress than expected since the end of the war in 2009, Sri Lanka has continued to attract foreign investment, particularly in the area of infrastructure. Sri Lanka has benefited from its proximity to the rising economies of India and China, and several firms have been active advising on proposed investments into Sri Lanka by Indian and Chinese firms.
PAKISTAN
Pakistan’s energy sector is booming, bucking the wider downturn in investment that has resulted from security concerns. Oil, gas, electricity, coal, wind, solar, biomass and hydropower are all growing, often with the aid of international investment. M&A activity has also been significant as companies have sought efficiencies and to consolidate their market positions. Technology, telecoms and IP have also been areas of growth. No privatisation took place in 2012 as the government remained under scrutiny regarding the transparency of its handling of national assets.
PHILIPPINES
The Philippines remains a relatively buoyant market, with predicted GDP growth of 5% in 2012. There continues to be high activity in the natural resources sector, although the mining industry will suffer if there is ever a slowdown in China’s market.
THAILAND
Despite the internal political troubles in 2010, and extensive flooding across many of the country's key provinces in 2011, Thailand has demonstrated its resolve to recover from these significant setbacks and looks set to emerge from its recent difficulties as a more stable country with a growing and buoyant market.
TAIWAN
Asia’s sixth largest economy, the export-reliant Taiwan has suffered from a slump in demand due to the European debt crisis and a growth slowdown in China, its main trading partner.
VIETNAM
High inflation, a nervous foreign exchange market, high nominal interest rates and declining foreign exchange reserves threatened Vietnamese economic performance in 2011, with the new government changing from a strategy aimed at growth to one of recovery in July 2011. A programme of reform was introduced for state-owned enterprises, the financial sector and public investment. Tvc his and other factors made 2012 a complicated year for Vietnam, as the country’s commercial sector dealt with these changes as well as inflation and the vulnerability of the banking sector. However, foreign interest in the market remains high, with large international companies finding Vietnamese assets available at good prices. Much investment has come from Japan – one of the market’s traditional big investors – particularly in energy and infrastructure projects as Vietnam remains in desperate need of major investment in this area. There is some concern that the opening up of Myanmar may impact Vietnam’s ability to attract investment.