Cheung Pui Yuen, Deloitte's audit regional managing partner
By the end of the year, the new ASEAN Economic Community (AEC) should be formed, creating an economic block that has the potential to emulate the early free-trade successes of the European Union by breaking down non-tariff barriers, for example through simplification of customs borders procedures and harmonisation of standards.
The AEC provides opportunities for ASEAN businesses, along with a set of challenges, and Deloitte Southeast Asia is now gearing up its presence throughout the region, in particular in the less-developed economies of Cambodia, Laos and Myanmar.
‘Collectively, Myanmar, Cambodia and Lao PDR represent new frontiers for Deloitte SEA,’ explains Cheung Pui Yuen, audit regional managing partner at Deloitte Southeast Asia. ‘There is a lot of interest from our clients, in particular Japanese companies, that want to invest in Myanmar, for example, and are looking for audit and tax services in the country. We have to respond to this demand.’
With GDP growth for the region forecast to reach 5.1% in 2015, according to the Organisation for Economic Co-operation and Development – well above the 3.5% projected by the International Monetary Fund for the world economy – and a combined population of about 630 million, the ASEAN region is increasingly viewed as an area into which many international corporates want to expand.
Aiming to strengthen its professional capabilities and answering clients’ increasing demand for professional services on the ground, Deloitte Southeast Asia has been expanding its network – for example, establishing a presence in Myanmar in 2013 through an independent correspondent firm (ICF), Myanmar Vigour, and then in Cambodia last year with a permanent office, Deloitte (Cambodia).
Deloitte SEA is now in the process of setting up an office in Lao PDR and increasing its presence and range of service offerings in Myanmar, Cheung says.
‘Clients in manufacturing, in particular, are looking for the next place to move their activity when China becomes too expensive, and some are also looking to expand from their Thailand base where there is some political risk,’ he says. ‘Myanmar, which has the 24th largest population in the world, also has the possibility to be a big consumer market,’ he adds.
‘We’re in the starting phase. Right now, we’ve a small team of about 60 people in Myanmar and 20 to 30 in Cambodia, but we want to scale it up to serve our international clients, but also eventually gain new local clients,’ Cheung adds.
The new business is not going to make ‘a huge difference to the bottom line’ at least for now, Cheung admits, pointing out that ‘it does require a lot of effort and time to start properly’; just as one would expect a McDonald’s burger to taste the same in Rangoon as it does in New York, international clients expect the same level of accounting services wherever they are, he says.
The key challenge, he believes, is bridging the technology gap. ‘Internet service providers are just not as developed in Myanmar as they are in Singapore,’ Cheung says. ‘The concept of the way you use a computer is very different. Security over the internet, encrypted emails – all this is foreign to them.’
Finding the right personnel who will look after quality and risk, and understand the standards of Deloitte, is another immediate challenge.
‘We also want to serve local clients, eventually, but we have to make clear what can and cannot be done. Before we take on a new client, we go through a rigorous assessment process,’ he says.
Myanmar and Cambodia remain plagued by corruption, both ranking 156th out of 175 countries in the recent 2014 Corruption Perceptions Index released by Transparency International. And on the World Bank’s Ease of Doing Business rankings, Cambodia comes in at 135 out of 189 countries, while Lao PDR ranked 148 and Myanmar ranked 177.
Integrating new teams is nothing new to Cheung, who was part of the Deloitte management team that led the initial integration of Deloitte Southeast Asia under one CEO in 2006. At the time, Deloitte member firms were found in eight countries but each was working independently. ‘This was quite an exciting project to work on; it happened because we wanted to offer clients seamless services across South-East Asia and we knew that in order to be different from our competitors we had to come together and work as one.’ he recalls, adding that this close integration model remains unique to Deloitte in South-East Asia among the Big Four.
Bringing all the pieces of the South-East Asia puzzle together was not easy, Cheung recalls, as there were different working cultures and each Deloitte office was at a different stage of development. ‘One of the key issues was trust; we were asking them to give up their own national management to pull everything together into a regional practice,’ he says. But the advantage of the proposed set-up – consistent quality of service, shared resources within a bigger pool and economies of scale – won employees over.
Cheung, with more than 25 years in public accounting in Australia and Singapore under his belt, has spent almost his entire career at Deloitte. He first undertook an internship at Deloitte, Haskins & Sells during his second year of university, where he spent around eight weeks in audit and two weeks in tax, just enough time to make him realise that the latter was not his ‘cup of tea’.
After graduating from the National University of Singapore in 1989, the young accountant opted to join the audit department of Touche Ross & Co, ‘because the firm had come to the campus looking for students and promising some overseas exposure’. Within a few months, Touche Ross announced it would be merging with Deloitte and he has remained with the firm for most of his career.
The firm quickly seconded him for two years to Deloitte Melbourne as part of its exchange programme. ‘It was a really great experience because, at the time, the accounting profession was far more developed there than in Singapore; clients were more willing to pay the higher fees and appreciated the value of audits. So I was given more opportunities to work on big engagements, and more time to research certain areas. The work was more varied, too,’ he recalls.
Another important early development in Cheung’s career was his decision to complete a Master’s degree in management studies at the University of Cambridge in the UK. ‘It gave me more of the human aspect of the discipline. In accountancy, we spend a lot of time looking at hard numbers. Here, I had the opportunity to learn about other issues like human resources, industrial relations and strategic management,’ he explains.
‘At the time we were learning about how to manage change, why people resist change, what you must do to make it easier for people to make them more comfortable to change. Do you make changes incrementally or through a big bang?’ he adds. All this study proved very useful when Cheung became a partner in 2000 and took on increasing managerial roles that required people skills – first managing the integration of a team from Arthur Andersen in transaction services (M&A group) in 2002, then heading the audit division in Singapore in 2007, followed by South-East Asia in 2011.
‘When I joined Touche Ross & Co, we had about 200 staff in Singapore. Today we have 2,000, with more than 800 alone in the audit division,’ he notes, adding that the audit profession has faced increasing pressure in recent years. ‘The challenge for audit has always been there, but there is much more attention from the press these days than there used to be. When I started, most people really didn’t know what audit did. Even today, I’m not sure the general public fully appreciates what an audit report really does. But with the regulator spending a lot more time making sure all firms provide high-quality services, I think the focus on quality has increased tremendously over the years.’
Today he sees his main challenges as managing the audit partners and staff in the region, while growing the business, ‘hopefully faster and more profitably than our competitors,’ he says. ‘But it’s easier said than done, even though I’m quite happy to say our revenues have grown steadily.’
Sonia Kolesnikov-Jessop, journalist
This article was originally published in the Singapore edition of Accounting and Business Magazine in July/August 2015.