17th Asia Pacific Roundtable
Speaking Notes for the presentation
by
ASEAN Secretary-General Ong Keng Yong
on
ASEAN Economic Community
9 August 2003, Kuala Lumpur, Malaysia
In the ASEAN Vision 2020, adopted in Kuala Lumpur in 1997, ASEAN’s economic goal by 2020 was defined as an “ASEAN Economic Region” in which there is a free flow of goods, services and investments, a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities. Since then, ASEAN’s Economic Ministers and officials have been fleshing out this goal with practical and viable schemes. Progress has been incremental because the ten ASEAN Countries have different levels of economic development and there are varied priorities in each of them. Consequently, the public and business sectors tend to view ASEAN economic integration as “slow”.
To crystallise ASEAN’s economic integration into an easily recognisable goal and to strengthen ASEAN’s economic competitiveness, the ASEAN Leaders’ meeting at their Phnom Penh Summit in 2002 decided to use the concept of an “ASEAN Economic Community” (AEC). Subsequently, two studies were undertaken by the Institute of Southeast Asian Studies and the ASEAN–ISIS. Various ideas on the character of the AEC were articulated in the two studies. The ASEAN Economic Ministers decided to set up a High Level Task Force on Economic Integration (HTLF) to consider these ideas and additional possibilities. Members of the HLTF are Permanent Secretaries and Directors-General of Ministries of Trade and Industry.
The HTLF appears to want to propose an incremental approach to achieve the AEC by building and existing ASEAN economic cooperation schemes, ensuring prompt implementation of ASEAN economic agreements and improving the mechanism for solving trade problems and trade disputes. The HTLF sees the AEC as an end-goal of economic integration in ASEAN by 2020. The AEC is a long-term process; a continuation of what ASEAN has been doing in economic cooperation. But to accelerate the process, it is necessary to be more focused, more innovative in tackling ASEAN’s varied economic conditions and more responsive to business community’s concerns and suggestions.
ASEAN’s trade liberalisation has made progress with its tariff reduction initiative, especially under the ASEAN Free Trade Area (AFTA) agreement. Intra-ASEAN trade grew steadily. However, the global economy has changed and the regional business/investment climate is no longer the same. ASEAN has to go beyond tariff reduction. Non-tariff barriers, trade-in services, the movement of skilled labour (professionals) and how to get more of the FDI flows into Asia must be addressed. ASEAN’s competitiveness is not just tariff reduction, harmonisation of tariff nomenclature and easing of customs procedures. These trade facilitation measures are important but by themselves, intra-ASEAN trade will not expand significantly and ASEAN’s external trade relations are unlikely to grow substantially. Since it is hard to have across the board liberalisation, the current thinking is to choose a few sectors and to push for their complete opening. The HTLF is following up on 11 sectors identified by the ASEAN Economic Ministers. It is also considering how to make the ASEAN Investment Area (AIA) agreement and the ASEAN Framework Agreement on Services (AFAS) more attractive to the business people and investors.
In essence, we need speed, focus, innovation, open-ness and inclusiveness (particularly private-sector inputs into business related policy decisions). There is no fancy or new architecture in constructing the single ASEAN market and production base. What we are doing is to attend to the expeditious evolution of ASEAN economic initiatives embarked on over the past decade and to ensure that the development gap among ASEAN Member Countries do not hinder the early realisation of the AEC.
