Fred dos Santos, Associate Director, SE Asia Practice & Partners (International)
From my discussions with law firms in the ASEAN region (the majority of which are in Singapore), it appears that, not unlike the rest of the world, there has been a significant drop in corporate transactional work in the region in 2023 compared to 2022. This has undoubtedly affected the hiring appetite of law firms in this and related practice areas.
Equity Capital Markets work has seen a notable decline, with listings in Singapore and other markets delayed. However, the outlook for M&A has been more complicated. Law firms with predominantly technology client bases have seen M&A deal flow dry up, with ensuing redundancies in those teams while those with energy or retail-focused teams have been less affected by the economic downturn, seeing less of a decline in billable hours. The most optimistic and robust M&A teams are reporting billable hours this year at a 70-80% rate compared to 2022. However, it is important to remember that 2022 was a considerably busier year, by all accounts. This denotes that successful, well-regarded firms have weathered the recent storms. Nevertheless, the general picture continues to be negative for 2023.
However, there is a mood of optimism that 2024 will be much stronger. Many of our clients have indicated that they expect corporate work, notably private equity, to pick up in the coming year and are seeking experienced corporate lawyers with marketing skills to capitalise.
Southeast Asia is a relatively bright spot in the world economy and shows that noteworthy M&A is likely to attract the attention of foreign direct Investors, not least from the regional heavyweights Japan and China.
According to the figures from the IMF, the growth rates of developing economies in Southeast Asia are likely to be at an average of 5.2% with the bulk of the deal activity coming from Singapore and Indonesia. Vietnam, which has performed well coming out of Covid difficulties, is hoping the reap the benefits of reducing trade and investment barriers with recent legislation. Once again, the energy and retail sectors are likely to lead the way.
Assuming stability returning to inflation, interest rates, and the general environment for investment, it is expected that Southeast Asia will benefit from an increased workload for M&A lawyers in the region, and more opportunities for corporate lawyers looking to further their careers in this vibrant regional market.