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ASEAN countries seeking speedier regional integration and enhanced subregional cooperation

Updated On: Aug 18, 2006

Senior economic officials met in Kuala Lumpur yesterday (16 Aug) to discuss issues of economic cooperation and to bring forward the realization timeline of the Asean Economic Community (AEC) from 2020 to 2015.

The Senior Economic Officials Meeting (SEOM) is a preparatory meeting to prepare the agenda for next week’s 38th Asean Economic Ministers (AEM) meeting where they will take stock of the process and commitments made towards regional economic integration which is important for trade and economic progress.

Several Asean members led by Singapore and Thailand were spearheading moves to push forward the AEC deadline because of concerns that Asian economic giants like China and India may overtake the region. The ambitious AEC seeks to form an expanded unified community similar to the European Union through various ways such as the integration of business sectors.

Asean countries have worked out roadmaps for the liberalization of 11 priority sectors including automotive, garment and textile industries, e-commerce, healthcare, airlines, tourism, wood-based products, marine and aquatic products, rubber, agro-based products and electronics. To expand the scope of the AEC, logistics will be included as another priority sector at the AEM meeting.

According to Malaysia’s Minister of International Trade and Industry Datuk Seri Rafidah Aziz, there has been significant progress towards economic integration since the last meeting in Vientiane last year. Countries have offered more products for tariff liberalization including those temporary excluded and in the sensitive list.

The CLMV countries comprising of CambodiaLaosMyanmar and Vietnam have also given the go-ahead to bring forward the AEC deadline despite limitations in their economic developments. Recognizing the different levels of economic development among Asean member countries, it has been agreed that there is a need for specific national policies to be maintained to promote individual national development objectives.  There are also the same concerns raised about the proliferation of bilateral FTAs within the Asean grouping and how these may impact the unity and integration of Asean. .

To address the issue, Asean secretary general, Ong Keng Yong at a separate event assured that individual FTAs will not affect Asean’s unity or halt its economic progress. “I am not worried about individual FTAs at this moment as the level of trade individually as a result of bilateral FTAs, is less than for instance Asean plus China…we need to nicely fit these individual FTAs with the bigger FTAs and trade ministers of the respective Asean countries knew this and hence where possible, we pull things together in one direction,” he said.

Mr.Ong later urged entrepreneurs to seize the moment and support Asean’s economic integration efforts. “It is clear that these efforts cannot be done by government alone but with the support and inputs of business community. As Asean introduces measures to deepen economic integration, the business community is presented with various new areas for commerce and expansion. These windows of opportunity should not be neglected but harnessed to sustain Asean’s competitiveness,” he said at a gala dinner marking the handing over of Asean Chambers of Commerce and Industry (Asean-CCI) presidency from Singapore to Thailand.

Several Asean countries are also embarking on greater subregional cooperation as a strategy for moving forward. MalaysiaIndonesia and Thailand have signed a landmark agreement last Monday (14 Aug) to harmonize aviation laws to help regional airlines. “In order to smoothen the operations of the airlines, we have agreed to harmonize existing aviation laws in four key areas – pilot age, aircraft certification, duty of pilots and usage of aircraft,” said Malaysia’s Civil Aviation Department director-general Kok Soo Chon in an interview.

Some Asean countries including Singapore are also considering bringing forward an open-skies agreement which is due to be implemented in the region by 2008. The agreement will allow a foreign airline to operate unlimited services to another country. The Asean agreement would initially apply for routes between Asean capitals and later expand to other cities. According to Air Asia CEO Tony Fernandes, such liberalization would bring the cost of airfares down, benefiting the countries involved.

The Philippine government and the Asian Development Bank (ADB) have also taken a step forward last Monday when they met to enhance their coordination on the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA).

“This important sub-regional grouping has great potential for economic growth that will improve the lives of million of people living in these areas. ADB and the Government of the Philippines share a common vision of a brighter future for BIMP-EAGA,” said the director-general of ADB’s Southeast Asia Department.

ADB is also aligning its efforts with the EAGA road map until 2010 that focuses on the promotion of intra and extra EAGA trade, tourism and investment, sustainable development on natural resources, infrastructural support to economic integration, and strengthening of subregional institutions and mechanisms.

Despite much optimism of new areas of cooperation developments, there remain differences and delays in countries’ willingness to abolish their tariffs. Thailand has announced that they will maintain a 20 percent import tax on automobile from Malaysia to counter Malaysia’s imposition of non-tariff barriers on automobile imports. Thailand was supposed to reduce the import tax to five percent under the Asean Free Trade Area (AFTA). Under AFTA, the 10 members of Asean have agreed to lower tariffs on imports of most products from member countries to a maximum of 5 percent by 2003. Malaysia had delayed its tariff reduction, citing that domestic car market was not yet ready for free competition.

Sources:

Officials discuss timeline to realize Asean Economic Community (Bernama, 16 Aug 2006)

Asean senior economic officials continue discussions (Bernama, 17 Aug 2006)

Asean officials begin talks towards further economic integration (Bernama, 16 Aug 2006)

Asean officials seek to speed up building of AEC (People’s Daily, China, 17 Aug 2006)

Concerns over FTAs voiced at Asean meeting (Bernama, 16 Aug 2006)

Malaysia wants Asean to transform itself into an economic bloc faster (All Headline News, 14 Aug 2006)

CLMV gives nod to AEC’s new deadline (Bernama, 16 Aug 2006)

Plenty of opportunities for entrepreneurs in Asean (Bernama, 14 Aug 2006)

Individual FTAs won’t affect Asean unity: Sec-gen (Business Times, Bernama, 14 Aug 2006)

Asean chalks up satisfactory economic progress since Vientiane meet business (Bernama, 15 Aug 2006)

ADB: Regional cooperation best for Philippines (Philippine Information Agency, 15 Aug 2006)

ADB, Philippine officials meet on development of East Asia Growth Area (Bernama, 14 Aug 2006)

AirAsia plane at Kuala Lumpur airport (Channel News Asia, Aug 2006)

Malaysia, Indonesia, Thailand agree on shared aviation laws (Jakarta Post, 16 Aug 2006)

Thailand to delay tax cut for Malaysian cars, parts (Bernama, 15 Aug 2006)

Tax on Malaysian cars maintained (Bangkok Post, 16 Aug 2006)