Secretary-General of ASEAN
at the
ASEAN-UK Business Forum
Lunch Reception
London, 31 May 2007

First of all, I would like to thank the ASEAN-UK Business Forum for inviting me to participate in this Lunch Reception. It’s a pleasure to be here and I welcome the opportunity to update and exchange views with you on trade and investment opportunities in ASEAN.

I would like to start by highlighting that, 10 years after the financial crisis of 1997, ASEAN economies have become more resilient and robust, enjoying an average real GDP growth of more than 5% since 2002.

Financial reforms have contributed to a sounder and robust financial system while fiscal consolidation efforts have led to much improved fiscal position with even fiscal surpluses recorded in several ASEAN Member Countries.

Total ASEAN trade with the world has doubled from USD 576 billion in 1998 to more than USD 1.2 trillion in 2005. This is a significant achievement considering that the pre-crisis level of trade during 1995-1997 was only around USD 700 billion.

Foreign Direct Investment (FDI), too, has more than doubled from its trough in 2002 of about USD 16 billion to USD 38 billion in 2005, also exceeding the pre-crisis level.

The EU has been and remains one of the top three trading partners of ASEAN (together with Japan and the US) with ASEAN trade with EU-15 accounted for about 15% of total ASEAN trade from 1995-1997, though its share had gradually declined to about 11% in 2005. During the same period, the EU maintained mostly trade surplus with ASEAN.

As one of the key members in the EU, the UK also maintained mostly trade surplus with ASEAN but its trade with the region has been less active as shown by the decline in its share in EU-15 trade with ASEAN - from 20% during 1995-1997 to about 13% in 2005.

Investment wise, EU-15 as a group has been the top investor in ASEAN during 1995-2004 with its share of total FDI ranging from 18% in 1995 to as high as 57% in 2000. It, however, lost the top spot to the US in 2005. In 2005, despite the 48% jump in total FDI from previous year, FDI from EU-15 actually declined by 9%, resulting in its share of total FDI decreasing by almost a half from 31% to 19%.

Unlike trade, FDI from UK has the lion’s share in EU FDI into ASEAN. The average share of UK’s FDI is 51% of total FDI from EU-15 to ASEAN during 1995-2005. During 2002-2005, its share has significantly increased to an average of 74% of total FDI from EU-15. In value term, the FDI from UK to ASEAN in 2005 stood at USD 4.4 billion compared to the total FDI from EU-15 to ASEAN as USD 7 billion. Singapore, Indonesia, Malaysia and Brunei Darussalam were the main recipients of FDI from the UK.

This FDI statistic and its increasing trend reflected a positive and keen interest in ASEAN from UK investors, many of whom, I believe, are represented by you.

I also believe that business leaders are well aware of the trade and investment opportunities that will be brought about by a closer and more integrated ASEAN, particularly as it realizes the ASEAN Economic Community (AEC) in 2015. More developed financial and capital markets as well as more open investment and capital account regimes will also make it easier to invest and expand operation in the region.

FTAs with China, Japan, Korea, India, Australia and New Zealand, which are in various stages of development, would effectively expand the market for ASEAN products and services. ASEAN and the EU have launched the FTA talks. A study has also been made on a multilateral FTA among the ASEAN Plus Three countries, that is, China, Japan and ROK.

As you can see, Asia is one of the most dynamic regions in the world and will continue to be for some time to come. Joining ASEAN which has been at the center of this development will allow you to effectively and productively enjoy the benefits of a growing and integrating region.

I do hope you share my views on the bright prospects of ASEAN and become our development and business partners.

Thank you.