At The
ASEAN Steel Conference
and the 8th Malaysian Iron & Steel Industry Federation Conference (MISIF)
on Status and Outlook of the Malaysian Steel Industry

Petaling Jaya, Malaysia, 28 August 2007

Mr. Chairman,

Let me first thank you and the ASEAN Iron and Steel Industry Federation (AISIF) and Malaysian Iron and Steel Industry Federation (MISIF) for inviting me to attend this conference. 

Iron and steel is today one of the most important and common materials in the world and is a major component in construction and industrial goods, be those for buildings, tools, automobiles, and home appliances.  The volume of steel consumed has been the barometer for measuring development and economic progress.

Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the century to 780 million tonnes at the end, and the latest statistics as of 2005 had indicated a figure of no less than 1,130 million tones .  An important feature of the growth trend of this industry is that after being in the focus in the developed world for more than a century, attention has now been shifted to the developing regions. 

ASEAN Member Countries are part of this important trend.  Expansion and investments in the iron and steel industry are growing throughout the ASEAN region and this trend is expected to continue.  While each of ASEAN Member Countries has yet to be on the top global list in this industry, a combined ASEAN is very significant, both as producer and as consumer. 

As such, as the Secretary-General of ASEAN, I would like to encourage you to pursue closer cooperation and integration of the industry in the region, like what we have been pursuing for on all fronts of ASEAN economic integration, and in fact, for all facets of ASEAN integration.  A conference like this would be a good avenue for discussing those challenges and opportunities.

I just came from the 39th annual meeting of the ASEAN Economic Ministers (AEM) and its series of related meetings, concluded just before I flew here.  Some of the latest decisions of this meeting may have direct or indirect impact on your industry.  But the key message is clear: ASEAN is committed to further integrating its economy as well as with its major trading partners (or what we referred to as “Dialogue Partners”). 

First of all, ASEAN is now finalising a single and coherent blueprint for advancing the ASEAN Economic Community (AEC) by the year 2015.  Early this year, as you may recall, the ASEAN Leaders at their Summit had agreed to accelerate the establishment of the ASEAN Community by 2015.  This blueprint will list down all specific actions and schedules required to achieve AEC in various areas such as trade in goods, services, investment, industry, intellectual property rights and SMEs; as well as finance, transport, telecommunications, information and communication technology, tourism, energy, minerals. agriculture, fisheries and forestry, and so on.  The Blueprint will transform ASEAN into a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy. 

In addition to the existing ASEAN’s initiative to accelerate integration in 11 priority sectors, this very recent ASEAN Economic Ministers’ meeting also signed a Protocol endorsing a roadmap to integrate logistics services as the 12th priority sector.  Through the integration of this very critical services sector, the Ministers hoped to further facilitate economic integration and development of production networks in ASEAN. 

Through the ASEAN Free Trade Area (AFTA), ASEAN has achieved significant progress in the removal of tariffs.  ASEAN will continue to eliminate import duties on all products, except for those phased in from the Sensitive and Highly Sensitive Lists by 2010 for ASEAN-6 and by 2015 for CLMV countries.  At the recent Ministerial Meeting, the Economic Ministers also tasked the officials to review and update the existing Common Effective Preferential Tariffs (CEPT) Agreement underlying the ASEAN Free Trade Area (AFTA), to make it more applicable to current ASEAN needs for accelerated economic integration towards 2015.  The Ministers look forward to a finalised trade in goods agreement by next year. 

However, free flow of goods would require not only zero tariffs but also the removal of non-tariff barriers.  The main focus of ASEAN towards 2015 will be placed on the full elimination of non-tariff barriers (NTBs).  This shall be done by 2010 for ASEAN-5, by 2012 for the Philippines, and by 2015 with flexibilities to 2018 for CLMV.

In addition, another major component that would facilitate free flow of goods is trade facilitation measures such as integrating customs procedures, establishing the ASEAN Single Window (ASW), continuously enhancing the CEPT Rules of Origin (ROO), and harmonising standards and conformance procedures.  In particular, the CEPT ROO will be reformed and enhanced to respond to changes in regional production processes, including making necessary adjustments such as the introduction of advance rulings, simplification of the Operational Certification Procedures (OCP), development of Product-Specific Rules (PSR), electronic processing of certificates of origin, and harmonisation of national procedures to the extent possible. 

Iron and steel products are already part of the inclusion list (IL) of the CEPT scheme of all ASEAN Member Countries.  Above 97% of these products (by tariff lines) are already traded at zero to five percent tariffs within the region.  In fact, almost 44% of them are already traded at zero tariff to-date.  As such, I urge you to take opportunity of initiatives such as this conference to address your industry-specific issues to further integrate yourselves beyond tariff issues. 

Distinguished Participants,
Ladies and Gentlemen:

The impetus towards acceleration of economic integration in ASEAN has been further driven by the ever-intensifying progress of ASEAN’s engagement in Free Trade Area (FTA) negotiations with a growing number of its Dialogue Partners.  These FTAs encompass all spheres of the economy, including goods, services, and investment.  While much progress has been achieved to-date in forming FTAs with China and Korea, ASEAN is also in intensive negotiations with India, Japan, Australia and New Zealand, and recently with European Union.  There is also a Trade and Investment Framework Arrangement (TIFA) with the United States and a similar agreement is being developed with Canada.  Furthermore, cooperation and integration of East Asia is strengthening with ASEAN playing a pivotal role. 

I note the particular attention you have given to ASEAN-China FTA due to the fact that China is currently the world’s number one producer as well as consumer of the iron and steel industry.  Let me remind you once again that liberalisation and economic integration initiatives are proliferating with other major economic players as well, and even at the global level taking place at the World Trade Organisation (WTO).  As such, I would like to reiterate, once again, my earlier call for you to pay more attention and intensify your efforts in consolidating and building a more competitive ASEAN iron and steel industry, rather than in addressing country-specific competition.  Sooner or later, more countries will compete for iron and steel as they develop their economies.  I deeply believe that a united and integrated ASEAN will have the potential in this industry to assume important role at the global market place. 

I wish your conference every success.  I hope the conference will further enhance the quality of ASEAN cooperation and integration in iron and steel industry. 

Thank you!