A new report commissioned by Labuan International Business and Financial Centre (Labuan IBFC) says leadership succession planning is a priority of family businesses in Southeast Asia because of its perceived importance in attracting investment.
The report Building Legacies: Family Business Succession in Southeast Asia, by The Economist Intelligence Unit (EIU), is based on a survey of executives in the region. The survey finds 67% of family businesses already have succession plans in place.
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Saiful Bahari Baharom, Chief Executive Officer of Labuan IBFC, said: "Family-run businesses account for more than 60% of all publicly-listed companies in Southeast Asia, making them an essential part of the region’s growth. Labuan IBFC, cognizant of their contribution to the region’s prosperity, commissioned this report because we believe intermediaries, accountants, lawyers and wealth managers will be interested in such a study, which will assist them in their business."
Two-thirds of survey respondents agree that customers and investors have more trust in a family-owned business with a succession plan than in a business that lacks one. Seventy-one percent of family business leaders say it is easier to attract investment with a succession plan in place.
Despite the majority of family businesses saying they currently have a leadership succession plan, only around half of executives expect the ownership structure of their companies to remain the same in a decade compared to nearly three quarters in five years, the report says. Discussion to form succession plans often takes place in informal settings, such as family council meetings.
Kevin Plumberg, the editor of the report, said: "Family businesses are the backbone of Southeast Asia’s economy. It’s a sign of their maturity that they are making leadership succession planning a part of their long-term business strategies. However, they need to establish stronger formal governance structures to help ensure continuity beyond the next generation."
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