ASEAN – A New Economic Driving Forceworldsmeexpo.hktdc.com/pdf/2011/SeminarRoom_D/Dec... · Facts...
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ASEAN – A New Economic Driving Force World SME Expo 2010 4 December 2010 Hong Kong Sundram Pushpanathan Deputy Secretary General for the ASEAN Economic Community ASEAN Secretariat
ASEAN – A New Economic Driving Forceworldsmeexpo.hktdc.com/pdf/2011/SeminarRoom_D/Dec... · Facts and Figures How ASEAN Compares in the World. II. ... which is an integral pillar
ASEAN – A New Economic Driving Force World SME Expo 2010
4 December 2010Hong Kong
Sundram PushpanathanDeputy Secretary General for the ASEAN Economic Community
ASEAN Secretariat
Presenter
Presentation Notes
Distinguished Guests, Ladies and Gentlemen, I would first of all like to offer my deep appreciation to the Hong Kong Trade Development Council (HKTDC), the organizer, for inviting me to the World SME Expo 2010 as well as the Standard Chartered Bank, Hong Kong who offered the generous financial support in bringing me here to deliver my Keynote Address to you. World SME Expo 2010 today provides a very good opportunity for me on behalf of ASEAN Secretariat to share with you the rich experiences ASEAN has gained in harnessing the opportunities and managing the challenges of regional development and integration towards the establishment of the ASEAN Community by 2015.
Outline of PresentationOutline of Presentation
I. Background A Historical Account of AEC Facts and Figures How ASEAN Compares in the World
II.ASEAN Economic Integration Main Elements of an AEC Towards the AEC
Presenter
Presentation Notes
In my presentation today, I am very pleased to highlight for your attention the progress that we have made in moving forward towards the ASEAN Economic Community (AEC), which is an integral pillar of the ASEAN Community. The AEC once established by 2015 as envisioned in the AEC Blueprint, the economies of ASEAN Member States will become fully integrated and unified to become a single market and production that will open opportunities both within ASEAN and outside ASEAN in terms of a competitive ASEAN. Our supply chain will be converged and well connected with more choice to source the raw materials or greater mobility of the manufacturing base. The AEC will also create greater investment options and instruments with full protection to investors;. Professional services, like medical doctors, nurses, engineers, will have the flexibility and greater opportunity to work within the region, not just in their own country.
Outline of PresentationOutline of Presentation
III. Regional Architecture
AEC Enhances External Economic Relations
Economic Architecture of Regional and Trans‐regional Forum
IV. ASEAN and China
ASEAN – China Economic Relations
ASEAN‐
China Business Community
Presenter
Presentation Notes
I will also show you how the AEC – or our integral economic integration – relates to our external relations. How ASEAN promotes a strong, competitive and a sustainable SME sector and what ASEAN means for China and how China stands in a very good position to benefit from the AEC. The AEC will also see a highly competitive ASEAN benchmarking itself and integrating with the global and regional production networks, vis-a-vis enhanced enterprises’ capability and productivity and in the process narrowing the development gap within and among all member states. These are not just visions but based on what is envisioned and the progresses actually made since the announcement of the Roadmap to achieving the AEC by 2015. Now please allow me to bring you the progress of AEC implementation.
1. ASEAN in Economic Context1. ASEAN in Economic Context
ASEAN at a Glance: 2003 and 2009Indicators Unit 2003 2009
Total land area km2 4,435,670 4,435,670Total population million 542.3 590.6Gross domestic product at
current prices US$ billion 718.4 1,499.4
GDP growth percent 5.4 1.5Gross domestic product per
capita at current prices US$ 1,327 2,534
International merchandise trade US$ billion 824.5 1,536.8
Export US$ billion 452.5 810.5
Import US$ billion 372.0 726.3
Export of Services US$ billion 78.5 162.8
Foreign direct investments inflow US$ billion 24.2 39.6
Visitor arrivals million 38.4 65.4Sources: ASEANstats, ASEAN Secretariat; and WTO Secretariat
Presenter
Presentation Notes
Over a five year period: - GDP per capita just about doubled – better standard of living - strong trade growth - exports of services show impressive growth - and yes, ASEAN countries remain favorite tourist destinations
ASEAN$1,499
China$4,985
Japan$5,069
India$1,236
Australia
and New
Zealand$1,112
ROK$833
ASEAN in the Global EconomyASEAN in the Global Economy2009 (GDP US$ billion)2009 (GDP US$ billion)
US$14,119
EU$12,465
Source: ASEAN Finance and Macroeconomic Surveillance Database and IMF
Presenter
Presentation Notes
In terms of GDP size, ASEAN economy is even larger than India, Australia/New Zealand and the Republic of Korea. The potential comes from the growing middle-class in ASEAN itself, China, Japan and India.
Source: ASEAN Statistics
Shares of ASEAN Trade Shares of ASEAN Trade
With Major Trading Partners 2009With Major Trading Partners 2009
Presenter
Presentation Notes
In 2009, China emerged as ASEAN's largest trading partner accounting for 11.6 percent of ASEAN's total trade while ASEAN rose to be China's 4th largest trading partner accounting for 9.7 percent of China's total trade.
Source: ASEAN Statistics
ASEAN Trade With Major Trading PartnersASEAN Trade With Major Trading Partners
2007 2007 ––
2009 2009 (USD Billion)(USD Billion)
FDI Inflows to ASEAN from Selected FDI Inflows to ASEAN from Selected PartnersPartners
2007 2007 ––
2009 (2009 (USD BillionUSD Billion))
Presenter
Presentation Notes
ASEAN has remained comparably attractive as investment destination considering that global investment flows declined by more than 37 percent last year.
Shares of FDI Inflows to ASEAN Shares of FDI Inflows to ASEAN 20092009
Strong economic recovery projected in ASEAN Member States across the broad.
II. ASEAN Economic IntegrationII. ASEAN Economic Integration
Presenter
Presentation Notes
ASEAN economic integration framework is generally characterized by the following: internal integration, which is mainly working towards the creation of a single market and production base under the ASEAN Economic Community and achieving ASEAN Centrality; and external economic relations, basically ASEAN’s FTAs and CEPs which are being pursued to tap market potential, enhance market access and for ASEAN to remain competitive vis-à-vis countries or blocs that directly compete with ASEAN. It goes without saying that the trade policy regimes of Member States are still being pursued on 3 fronts – multilateral or the WTO, regional and bilateral
ASEAN Community
Target date: 2015 A Community based on three fundamental
pillars seeking to narrow our development gap:
ASEAN Political and Security Community (APSC)
ASEAN Socio‐Cultural Community (ASCC)
ASEAN Economic Community (AEC)ASEAN Economic Community (AEC)
Initiative for ASEAN Integration (IAI)Initiative for ASEAN Integration (IAI)
Roadmap for an ASEAN Community 2015 that includes 3 Community Blueprints
Main Elements of AEC
Presenter
Presentation Notes
Based on the ASEAN Economic Community Blueprint, the AEC will be founded on four pillars: single market and production base competitive economic region equitable economic development integration into the global economy
facilitation, customs, standards and conformance, and sanitary and phytosanitary
measures
• Consolidates and streamlines various provisions
on trade in goods into a single reference document
• Full tariff reduction scheduled up to 2015
of each ASEAN Member State and spells out the tariff rates to
be applied for each year
Presenter
Presentation Notes
The ASEAN Free Trade Area (AFTA) remains to be the cornerstone of ASEAN Member States’ efforts to establish in ASEAN a single market and production base. The ASEAN Trade in Goods Agreement, signed in February 2009, succeeds the 1992 Agreement on Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area (CEPT-AFTA). ATIGA brings into one single agreement all aspects of trade in goods and provides the legal framework to realize free flow of goods within the AEC. Tariff liberalization in ASEAN has been very successful. As of 1 January 2010, Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand have eliminated tariffs for imports of ASEAN originating products on 99.65% of trade tariff lines. Cambodia, Lao PDR, Myanmar, and Vietnam have reduced tariffs on 98.86% of their traded lines to within the range of 0-5%
Ultimate goal: full elimination of NTBs
• Enhance Transparency by abiding to the Protocol on Notification Procedure and setting up an effective
Surveillance• Commitment of a standstill and roll‐back on NTBs• Remove all NTBs
by 2010 for ASEAN‐5, 2012 for the
Philippines, 2015 with flexibilities for CLMV
• Enhance transparency of NTMs
• Work towards having regional rules and regulations consistent with international best practices
Non‐Tariff Barriers (NTBs)
Towards the AEC
ASEAN Single Window
Countries at different stages of operationalisation
Brunei Darussalam, Indonesia, Malaysia, Philippines have tested exchange of Form D under the ASW
Ten AMS are in the process to sign MOU on pilot project for ASW (with 3 AMSs
as observers)
Standards and Conformance
The ASEAN Guideline on Good Regulatory Practice
Mutual Recognition Arrangement on Good Manufacturing Practice of Medicinal Products,
Automotive, Electronic and Electrical Equipment
Presenter
Presentation Notes
Mutual Recognition Arrangements How does an MRA facilitate greater flow of people in ASEAN? ASEAN Mutual Recognition Arrangement (MRA) enables service providers registered/certified in a signatory ASEAN Member State to be equally recognised in other signatory ASEAN Member States; i.e., they can be registered for the equivalent occupation in these other Member States. Hence, MRA is a vehicle for promoting economic integration through reduction of regulatory impediments to mobility of services professionals across different countries. Does an MRA allow foreign professionals to practice and supply their services freely across the region? An MRA does not warrant unrestricted free flow of foreign professionals. Relevant domestic regulations and market demand still applies. Besides, an ASEAN services professional still need to qualify and satisfy all the requirements of a relevant ASEAN MRA before they could benefit from the MRA.
Towards the AECTrade in Services:• 7th package of services commitments ‐
Completed
• 8th
Package signed at the recent ASEAN Summit in October 2010 and to start negotiations for completion by 2011
ASEAN Comprehensive Investment Agreement• Merges the 1987 ASEAN Agreement for the Promotion and
Protection of Investments and the 1998 Framework Agreement on the ASEAN Investment Area, with further enhancements
(comprehensive investment, in addition to liberalisation
and protection provisions – promotion and facilitation provisions) –
under one umbrella
• Issue on reservation lists has been overcome and steps being taken to enter ACIA into force
Presenter
Presentation Notes
Modes services supplied from one country to another (e.g. international telephone calls), officially known as “cross-border supply” (in WTO jargon, “mode 1”)�consumers or firms making use of a service in another country (e.g. tourism), officially “consumption abroad” (“mode 2”)�a foreign company setting up subsidiaries or branches to provide services in another country (e.g. foreign banks setting up operations in a country), officially “commercial presence” (“mode 3”)�individuals travelling from their own country to supply services in another (e.g. fashion models or consultants), officially “presence of natural persons” (“mode 4”)
Towards the AECMovement of Skilled Labour:
Mutual Recognition Arrangements (MRAs) for eight
professional services, namely, engineering, nursing, architectural, surveying and accounting services; tourism
professional; medical practitioners and dental practitioners.
Finance:
Chiang Mai Initiative Multilaterisation
(CMI): Increased
size of the Fund to US$120 billion
Concluded the Fourth Round of financial services
liberalisation
negotiations under the ASEAN Framework Agreement on Services (AFAS) and agreed to launch the Fifth Round of negotiations which will conclude by 2010.
Presenter
Presentation Notes
ASEAN and the AEC to come will also be a region with largely free movements of skills and professionals. In fostering labour market integration, ASEAN Member States have worked together to establish the national skills framework under the ASEAN Labour Ministers (ALM) Work Plan 2010-2015.
Towards the AEC
Competition Policy
ASEAN Regional Guidelines on Competition Policy and
Handbook on Competition Policy and Law in ASEAN for Business was launched on 24 August 2010
Intellectual Property Rights (IPR)
ASEAN IPR Action Plan 2004‐2010 and the Work Plan for
ASEAN Cooperation on Copyrights being implemented
“IP Direct”
(June 2009): online dictionary of IP related
resources
ASEAN Patent Examination Cooperation: easier for
entrepreneurs (SMEs
and inventors) to obtain patents for innovation in the region
Presenter
Presentation Notes
The AEC Blueprint also envisages ASEAN to be a highly competitive and innovative player in the global and regional production networks and value chain. The “ASEAN Regional Guidelines on Competition Policy” and the “Handbook on Competition Policy and Law in ASEAN for Business” were completed and launched on 24 August 2010. Likewise in the field of IPRs, several initiatives have been introduced in support of AEC formation. The ASEAN Patent Search and Examination Cooperation (ASPEC) and the ASEAN IP DIRECT, for example, are two major deliverables completed under the AEC Blueprint.
SME and the AEC
SMEs
are the backbone of ASEAN Economies
Account for more than 96% of enterprises
50‐95% of employment
30‐53% of GDP
19‐31% of Exports
Fostering SME development has been one of the priority issues for policy attention and resources in
ASEAN
Presenter
Presentation Notes
Region of equitable economic development SMEs are the backbone of ASEAN Member States (AMSs) – especially in terms of income and employment generation, gender and youth empowerment through business participation, and their widespread presence in non-urban and poorer domestic regions. Their development and modernization is important in achieving inclusive and equitable development. The SME sector in ASEAN, is confronted with a wide-range of structural, financial and other challenges, among which are limited access to finance, technologies and markets; and the lack of entrepreneurial spirit and management skills. These problems are compounded by the lack of information, inadequate capacity for compliance with standards and certification, and the absence of a more conducive business and policy environment. Fostering SME development has been one of the priority issues for policy attention and resources in ASEAN.
Current Activities on ASEAN SME Development and Integration
I.
Enhancing SME Access to FinanceII.
Building linkages and networks amongst SME
Institutions and AgenciesIII.
Promotion of trade & investment of SMEs
intra
and intra‐
ASEAN region IV.
Promote human resource development
V.
Establishing SME business and technology incubators facilities
VI.
Establishing SME Service Centres
Presenter
Presentation Notes
Current Activities on SME Development and Integration in ASEAN: Facilities introduced to improve SMEs’ access to finance, entrepreneurship, and management and organization skills; Linkages and networks involving SMEs under formation with intra- and extra-regional Agencies, Institutions and other stakeholders. Proactively disseminate information on event, trade fair, exhibition, expo or festivals among countries and dialogue partners using various media and hyperlink of websites; To encourage competitiveness amongst SMEs by recognising the Top 1000 ASEAN SMEs and to initiate the ASEAN SME Innovation Awards, starting 2011 Promote human resource development through the establishment of Common Curriculum for Entrepreneurship Development in ASEAN and Internship schemes for skills enhancement and entrepreneur exchanges programs, which are currently under development Establishing SME Business and Technology Incubator to nurture and support techno-entrepreneurs from infancy to commercialization stages. Establishing an integrated national SMEs service center with regional and sub-regional linkages in AMSs to assist ASEAN SMEs in improving their technological and managerial capabilities
Public –Private Engagement (PPE)
Regular consultations and business dialogues between ASEAN Ministers and Senior Officials and
private sectors from various priority industry sectors as well as the foreign chambers of commerce in
ASEAN
Participation in regional exposition & conference:
‐
7th
CAEXPO & 7th
CABIS held from 20‐24 October 2010 with the theme ‘CAFTA as a New Opportunity’
‐
Shanghai World Expo: May – October 2010‐
Indian‐ASEAN Expo & Business Conclave, 2‐6 March
2010
Presenter
Presentation Notes
Target PPE has been promoted by AMSs to improve the coherence, consistency, clarity, practicality and transparency of public and private policy and initiatives Progress and Key Achievements Regular consultations between ASEAN Sectoral Bodies and many private-sector associations and representatives and more recently, between the AEM and the ASEAN Business Advisory Council plus representatives of the textiles industry and automotive industry in ASEAN PPE carried out in the form of joint participation in exposition and trade fairs (e.g., the annual ASEAN–CHINA EXPO (CAEXPO) in Nanning, China, have created opportunities for ASEAN enterprises, including SMEs, to exhibit their products and to tap the potential of the huge ASEAN-China market). Participation in the Shanghai World Expo 2010 during May-October 2010 with 70 million visitors is another supportive example of PPE. The 3rd Annual Business Dialogue between the Federation of Japanese Chamber of Commerce and Industry in ASEAN and H.E Dr. Surin was convened in 6 July 2010. The Business Dialogue serves as a platform to share and inform each other on the latest regulatory developments and challenges facing the private sectors. Publications to be produced to communicate benefits of ASEAN Integration, targeted at the various stakeholders such as the private sector, the government, civil organisations and student groups to be disseminated to Member States.
III. AEC and Regional ArchitectureIII. AEC and Regional Architecture
Presenter
Presentation Notes
East-Asia/ Asia-Pacific– this region is of interests to many people inside and outside the region. Competing regional strategy. ASEAN integration is taking place in the context of an evolving regional architecture.
Enhancing ASEAN External Economic Relations
ASEAN-Australia- New Zealand FTA
ASEAN-Korea FTA
ASEAN-Japan CEP
ASEAN-Canada
ASEAN-China FTA
ASEAN-Russia
ASEAN-EU
ASEAN-GCC
ASEAN- India FTA
ASEAN-US TIFA
ASEAN-Pakistan
ASEAN- MERCOSUR
Presenter
Presentation Notes
With ASEAN as the core – our concept of ASEAN Centrality – we pursue external economic relations. There are FTAs and CEPs. There are region-to-region cooperation. There are considerations to integrate ASEAN-Plus FTAs.
Economic Architecture of Regional and Trans‐regional Forum
Source: Emerging Asian Regionalism, A Partnership for Shared Prosperity
Presenter
Presentation Notes
How ASEAN, the Member States, and our Dialogue Partners are involved in different regional forum.
IV. ASEAN and China Economic IV. ASEAN and China Economic RelationshipRelationship
Presenter
Presentation Notes
East-Asia/ Asia-Pacific– this region is of interests to many people inside and outside the region. Competing regional strategy. ASEAN integration is taking place in the context of an evolving regional architecture.
ASEAN China Economic Relationship
ASEAN China FTA (ACFTA) ‐
1 January 2010 marked the full realization of the ACFTA
ACFTA ,covering 1.9 billion consumer, is the world’s
largest FTA in term of market size
It is ranked third in term of economic value with
combined GDP of approx. US$ 6 trillion
ACFTA is aimed to increase bilateral trade ,
investments, GDP, greater economic efficiency
Presenter
Presentation Notes
January 1, 2010 marked the establishment of ASEAN-China FTA, the world’s biggest free trade area of 1.9 billion consumers, a combined gross domestic product (GDP) of approximately US$ 6 trillion, and total international trade of US$ 4.3 trillion. It is ranked as the largest free trade area, in terms of market size, and third – after the European Union (EU) and the North American Free Trade Area (NAFTA) – in terms of economic size. The most obvious economic benefits out of the ASEAN-China FTA include increased bilateral trade, expanded GDP, greater economic efficiency, lower costs, and increased investment which may lead to the better research and development and then technological innovation.
ASEAN‐
China Business Community Challenges Ahead
ASEAN‐China Business Portal ‐
Officially launched on 7 January 2010
The portal is aimed to accelerate trade and investment
between China and ASEAN member countries and provide essential information on the ASEAN‐China FTA to the
business enterprises
Portal mostly hit by Chinese enterprises with strong interest
to expand their market and supply chain with enterprises in ASEAN
Presenter
Presentation Notes
The ASEAN-China BIZ Portal was officially launched on 7 January 2010 on the occasion of the Forum on ASEAN-China Free Trade Area held in Nanning City, Guangxi, China. The development of the business portal is to boost ASEAN-China economic relations and to accelerate trade, investment, logistics, financial, service, culture and tourist communications and common development among the parties. In particular, the portal will provide essential information to the business sector on the ASEAN-China FTA. Since its launch, the Portal has been frequented by visitors, mostly from China, followed by Singapore and the US. The number of “hits” by Chinese visitors indicates their strong interest in the Portal and at the same time highlights the need to generate stronger interest from the other ASEAN countries.
Concluding Remarks
Achieving AEC by 2015
ASEAN needs to continue with integration process
AEC as the next logical step in ASEAN integration
F0cus going beyond tariff: trade facilitation
SMEs
play strategic role in deepening economic
integration
Business Enterprises in ASEAN, China and Hong
Kong are urged to make most use of the benefits from the ASEAN China FTA as well as other economic
cooperation e.g. ASEAN‐China Biz Portal
Presenter
Presentation Notes
SMEs have an exciting role to play in the wake of these developments in ASEAN and the global economy. But bold changes in business mindset and a supportive policy environment are needed to bring performance of the regional SMEs closer to their potential. Business community are urged to make most use of the ASEAN China FTA which comprises, the Agreements of Trade in Goods, Trade in Services and Investment Agreement. ASEAN China Biz Portal is available in Chinese, English and some AMSs’ national language. The portal also provides the ACFTA –related information and the opportunity for linkage of market and supply chain between ASEAN, China and Hong Kong Invite Hong Kong SMEs to undertake Business Missions to AMSs to identify potential partners for synergy.
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