Asean for single market by ’15 to block FDI loss to China, India

KUALA LUMPUR: Southeast Asian economic ministers have agreed to push for the creation of a single regional market by ’15, five years ahead of schedule, to avert the loss of foreign investment to China and India.

Leaders of the 10-member Association of Southeast Asian Nations will discuss plans to fast-forward the establishment of the ambitious European-style Asean Economic Community at their December summit in the Philippines.

“We all agreed to recommend to the leaders that we would accelerate to ’15. The issue is how to get there, we have to discuss a more in-depth kind of a blueprint,” Indonesian trade minister Mari Elka Pangestu said.

In an opening speech on Tuesday at the start of the talks which will run through to Friday, Malaysian Prime Minister Abdullah Ahmad Badawi urged the region to advance liberalisation or face losing foreign investment. “If we do not hasten the creation of that regional single market, ASEAN may run the risk of losing its position as an important investment destination,” he said.

Abdullah said the 10-member Association of Southeast Asian Nations (ASEAN), with a population of 560m people, must protect its position as a competitive production base.

Foreign direct investment (FDI) in ASEAN surged 48% to $38bn last year, but China remains the favourite of global investors, Malaysia’s trade minister Rafidah Aziz has said.

Rafidah said investment flowing into ASEAN in 2005 saw it reclaim levels last seen before the 1997 Asian financial crisis, when it peaked at 34 billion dollars.

“In goods, it’s about trade facilitation, and then we have to talk about services and investment, because these are the major components for the acceleration,” he said .Despite doubts that the four less-developed Asean members, Cambodia, Laos, Myanmar and Vietnam can attain the goal, the bloc’s secretary-general Ong Keng Yong said they had agreed on Tuesday to sign up to the initiative.“The Asean way is that we all come together, we agreed, we go together. The less developed economies, we will help them. We will develop their capacity,” he said.

“We all agreed that we should move in that direction to meet with the competition and to use that accelerated calendar to make our respective economies more efficient, more effective, more quickly.”Mr Yong said.

In an opening speech Tuesday at the start of the talks which will run through to Friday, Malaysian Prime Minister Abdullah Ahmad Badawi urged the region to advance liberalisation or face losing foreign investment.
“If we do not hasten the creation of that regional single market, ASEAN may run the risk of losing its position as an important investment destination,” he said.

Abdullah said the 10-member Association of Southeast Asian Nations (ASEAN), with a population of 560 million people, must protect its position as a competitive production base.

Foreign direct investment (FDI) in ASEAN surged 48 percent to 38 billion dollars last year, but China remains the favourite of global investors, Malaysia’s trade minister Rafidah Aziz has said.

Rafidah said investment flowing into ASEAN in 2005 saw it reclaim levels last seen before the 1997 Asian financial crisis, when it peaked at 34 billion dollars.

“From the standstill, work will be done to remove as many (non-tariff barriers) as possible,” she said.
Abdullah said ASEAN must balance national and regional interests to become a single, integrated and seamless consumer market and international production base.

“We must not allow anything to derail the progress we have made thus far in this process,” he said.
As part of its bid to slash the tariffs and red tape which made the unified China market more attractive to manufacturers, ASEAN agreed Tuesday to adopt a “standstill” on non-tariff barriers, Rafidah said.

Also attending this week’s talks will be ministers from ASEAN’s dialogue partners — Australia, China, India, Japan, New Zealand and South Korea.

On Friday ASEAN will hold trade talks with the United States, and the two sides are expected to ink a trade and investment framework pact.

The United States at present has “trade and investment framework” agreements with key individual ASEAN economies, which are aimed at setting the stage for fully fledged free-trade agreements.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.