An Update on ASEAN’s Economic Agenda
Speaker: H E Ong Keng Yong, Secretary-General
ASEAN (Association of Southeast Asian Nations)

Ladies and Gentleman.

I would like to thank AmCham for giving me this opportunity to share with you my thoughts on the ASEAN economic agenda and how we are moving forward.

When ASEAN was formed in 1967, we only had 5 countries namely, Indonesia, Malaysia, the Philippines, Singapore and Thailand. In 1984, Brunei Darussalam became a member. So we have the ASEAN Six. In the late 1990s, Vietnam, Laos, Myanmar and Cambodia joined the Association and they are known collectively as the ASEAN Four.

When the concept of ASEAN was mooted, many observers thought we would not go far due to our diverse backgrounds and working systems. However, we had stuck together. We resolved our differences. We developed ways to move forward. The SARS crisis is one recent example where ASEAN cooperated and collectively fought the deadly disease successfully.

Separately, each of the 10 ASEAN Member Countries is a small economy in the global market. But together they represent a market of more than 520 million people, with a combined GDP of about US$600 billion and a total trade of more than US$780 billion in year 2000. 

ASEAN as an entity, is about half the size of China in population and GDP but ASEAN is a bigger trader than China. ASEAN is the fourth biggest trader in the  world, after the EU-15, the USA and Japan.

All the major economic powers in the world are ASEAN’s dialogue partners and have established strong economic relations with ASEAN over the years. Numerous cooperation projects in a wide field have been implemented or are ongoing. In the last two years, ASEAN has undertaken extensive efforts to liberalise trade with these dialogue partners. China for example, is negotiating with ASEAN on a free trade area (FTA) arrangement.  Japan is working with ASEAN to prepare a framework on closer economic partnership.  ASEAN and India are moving towards an agreement to enhance economic cooperation and further expand trade linkages. 

During the APEC Economic Leaders Meeting in Mexico, in 2002, President George Bush met with the ASEAN Member Countries which are members of APEC and proposed the Enterprise for ASEAN Initiative (EAI) which is aimed at developing closer trade and investment relations.  ASEAN and the USA are now working on the text of a trade and investment facilitation agreement as a first step in concretising the EAI.

The EU is a long-standing partner of ASEAN. The ASEAN Economic Ministers and the Trade Commissioner of the EU, have agreed that the two sides would pursue a Trans-Regional EU-ASEAN Trade Initiative (TREATI) which is likely to increase business and investment flows between ASEAN and Europe.

Apart from fostering closer ties with the major economic powers, ASEAN itself has achieved more economic integration. The ASEAN Leaders agreed to eliminate all tariffs by 2010 for the ASEAN Six and by 2015 for the ASEAN Four. Since its inception in 1992, the ASEAN Free Trade Area (AFTA) has been put in place steadily by the ASEAN Member Countries. For the ASEAN Six , the tariff reduction has reached 0 to 5% for close to 100% of the goods. Looking at the rate the ASEAN Member Countries are working together on AFTA, we should be on target to achieve our goals.

But AFTA is not only about tariff reduction. ASEAN is also focussed on efforts to eliminate of bottlenecks arising from non-tariff barriers, non-harmonisation of standards and technical regulations, and cumbersome customs procedures. Product standards and safety regulations are being harmonized, either regionally under the relevant ASEAN framework, or bilaterally under mutual recognition arrangements. Member Countries of ASEAN are working on a clear interpretation and application of rules of origin and on more effective mechanisms to resolve trade operational problems and to settle trade disputes.

We realize that there are multi-faceted operational difficulties. Implementation of agreed rules across national boundaries would take time. Key officials at the top level are working more closely with the ground people to resolve these issues.  We are seeing more energy and responsiveness at the ground level. Inter-agency coordination with individual Member Countries is being improved. Exchange of information and best practices has been intensified.

However, this is still not enough. The private sectors, Chambers of Commerce and SMEs  also need to work together. The Business Chamber in Myanmar for example, organised seminars to educate its members about WTO, FTAs and so on. Private sectors in ASEAN Member Countries are urged to make use of the ASEAN Business Advisory Council to convey their views on economic integration to the ASEAN political leadership.

Some people have questioned the proliferation of bilateral FTAs between ASEAN Member Countries and external powers. Looking at this in another way, it is merely an attempt by ASEAN to quicken the pace of trade liberalization and economic integration within the region. Those in ASEAN who are ready to proceed first with FTAs can be path finders or trial blazers and the others can join later when they are prepared to do so. However, individual ASEAN Member Countries engaging in bilateral FTAs are mindful of their respective commitments to AFTA and WTO. They have worked within those broader frameworks.

To make ASEAN’s economic goals in the ASEAN Vision 2020 more understood to the business community and foreign investors, the ASEAN Leaders conceptualised an ASEAN Economic Community (AEC) at their 2002 Summit in Phnom Penh. A number of studies have been made since then to flesh out the AEC concept.

A High Level Task Force had been set up by the ASEAN Economic Ministers to explore the AEC concept and other ideas on intensifying ASEAN economic cooperation and deepening market integration.  The ASEAN Business Advisory Council will also be providing inputs from the private sectors. All these will be carefully studied by the ASEAN Economic Ministers in their meeting in September 2003 in Cambodia. They will then send the relevant recommendations to the ASEAN Leaders at the Bali Summit on 7 and 8 October 2003.

Conclusion
Internally, ASEAN is integrating its component markets to increase productivity, attract more investments and expand trade. Externally, ASEAN is actively forging significant economic linkages with all major powers. The aim of growing intra-ASEAN trade and intra-ASEAN investment will be achieved more speedily with better focus in implementation, follow-through and handling feedback from the business community. At the same time, ASEAN remains open to all wishing to promote and expand economic and trade ties. The key is to strengthen the confidence of all in ASEAN’s potential and ASEAN’s value to each of them.