Asean pads up for big play as India, China race ahead

SINGAPORE: Southeast Asian businesses and governments must accelerate efforts to fuse into an EU-style single market by 2015 or risk losing out to China and India, several of the region’s trade ministers said on Sunday.

“If we cannot start to really integrate ourselves faster we would see our competitiveness eroded furthermore,” Cambodian commerce minister Cham Prasidh told a gathering of business leaders ahead of the annual Association of Southeast Asian Nations summit, which opens Monday in Singapore.

Faced with increasing competition from Asia’s economic powerhouses, China and India, the 10-member regional association agreed last year to form an economic community by 2015 with a single market for the free flow of goods, services, investments and skilled labour.

He asked why ASEAN members were not able to compete with India and China. “It’s because goods from one province of China go to another province without paying duty. That’s why the China product is very competitive,” Cham Prasidh said. “Now, if we in ASEAN, we behave like we are one province ... we are going to have, at the end of the road, a very competitive bloc.”

ASEAN has a market of more than half a billion people with a combined gross domestic product - the sum of all goods and services - more than $500 billion. Its members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Cham Prasidh said ASEAN’s plans to adopt a charter Tuesday aimed at giving the bloc a legal identity was like a “wedding ceremony” that marked an important step toward market integration.

“It means now you have responsibility, vis-à-vis your counterpart, or ‘spouse,’ ... because now we’re legally tied together,” he said. ASEAN countries were also expected in the coming week to sign an economic blueprint that will set out milestones for removing trade barriers among member nations.

Indonesian trade minister Mari Pangestu conceded there was scepticism over whether ASEAN could effectively implement the plan to free up trade, given the concerns by businesses that a single regional market would increase competition.

“How do we consummate this marriage? Quite frankly, it’s not going to be easy,” said Pangestu. She said domestic businesses would have to improve their ability to upgrade productivity and innovation.