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2015ASEAN Economic Integration & Implications for Exporters
JACK ANDRE, NATHAN ASSOCIATES INC.
Southeast Asia NOW!Business Outlook ConferenceNovember 9, 2011
w w w. n a t h a n i n c . c o m
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ASEAN
• Five original members―Indonesia, Malaysia, Philippines, Singapore, and
Thailand―Newer members are Brunei, Vietnam, Laos,
Burma (Myanmar) and Cambodia• Founded in 1967 to
―Accelerate regional economic growth, social progress and cultural development
―Promote regional peace and stability
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Why Is ASEAN Important to the U.S.?
• Population about 620 million, total area of 4.5 million sq. km
• Combined GDP approaching US$ 2.0 trillion, strong growth
• U.S. two-way trade with ASEAN was about US$178 billion in 2010
• ASEAN is our 4th largest overall trading partner, also 4th largest market outside NAFTA
• Accounts for 440,000 U.S. jobs
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Trade Details
• 2010 U.S. Exports to ASEAN were $ 70 billion, up 31% over 2009
― Electronic products like unfinished semiconductors and integrated circuits
― Commercial aircraft and related equipment
― Other products include chemicals, agricultural products and machinery
• 2010 Imports from ASEAN were $ 107.8 billion, up 17% over 2009
― Electronic products, computer, peripherals and parts, though trade shifting to China
― Textiles/apparel
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ASEAN Compared to other Regional Investment Destinations
• $157 billion U.S. Direct Investment in ASEAN in 2010 Is More than:
―China - $60 billion―Japan - $113 billion―Korea - $30 billion―Australia - $134 billion
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U.S. FDI by ASEAN Country
U.S. Foreign Direct Investment in ASEAN, 2010
Indonesia 15,502
Malaysia 15,982
Philippines 6,579
Singapore 106,042
Thailand 12,701
Brunei 34
Burma (*)
Cambodia 4
Laos (3)
Vietnam 623
Total 157,464
$ million, Cumulative, Historical Cost Basis, Source: USDOC Survey of Current Business, September 2011, Table 14; (*) = + or - $500 k
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ASEAN Integration
• ASEAN is aiming at economic, political-security and socio-cultural integration by 2015. Why?
―Singapore Foreign Minister Yeo: “By 2017 we know that China and India will be the major powers. By 2027, they will be very big powers…Our survival chances are higher if we have ASEAN, than if we don’t have ASEAN. And it is this which is really what is galvanising us.”
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ASEAN Integration cont.
• The economic case itself is compelling. Integration would:
―Raise GDP by 0.5% to 1%―Greatly increase foreign investment, by an
estimated 28% to 63%― Provide greater efficiencies, cost of producing
consumer goods down by 20%―Benefit poorest member countries the most
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• Bangkok Declaration (August 8,1967)
• ASEAN Charter (2007) ―Provides ASEAN a stronger legal
personality and makes it rules-based
―Calls for creation of a human rights
body
• Roadmap for an ASEAN Community ―Three community blueprints and
the Initiative for ASEAN Integration
(IAI) Strategic Framework and the
IAI Work Plan 2.
Key ASEAN Documents
THE ASEAN CHARTER
Elements of the ASEAN Community of Interest to Business
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Political Security
Pillar
• Good governance
• Rule of law• Judicial systems• Legal infrastructure
Economic Pillar
• Economic integration
• Trade and investment facilitation
• SME integration• Strengthen financial systems and capital markets
Socio-Cultural Pillar
• Regional environmental issues
• Public health• Disaster management
• Sustainable energy management
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U.S. Role
• U.S. supports ASEAN integration
―Focus on major interests of U.S. business―Approximately160 areas of cooperation ―State and USAID assistance of about $7 million
per year―The U.S. was first to name an Ambassador to
ASEAN and opened a mission in Jakarta where the ASEAN Secretariat is located.
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Problems Identified by Business
• ASEAN has:
―Subscale markets. Companies can’t manufacture and market goods for the whole region.
―Unnecessary costs. Different product standards across member countries prevent businesses from standardizing products—adding 10 to 15% to costs.
―Unpredictable policies. Tariff rates can be determined by the judgment of customs officials rather than government policy, adding to costs and customs clearance times.
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US Cooperation with ASEAN – Agreements
• Joint Vision Statement for the ASEAN–U.S. Enhanced Partnership (AEP 2005)
―Set out broad goals for all pillars of ASEAN integration under the Vientiane Action Program
• AEP Plan of Action (2006)
―5 year plan; a new plan is will be approved this month
• Trade and Investment Framework Arrangement (2006) - Led by USTR
• Joint Declaration at each of the ASEAN-U.S. Leaders Meetings (2009 and 2010)
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First ASEAN–U.S. Leaders Meeting, November 2009
ASEAN Secretary General Surin Pitsuwan shares with President Obama a copy of Realizing the ASEAN Community at the first
ASEAN-U.S. Leaders Meeting in November 2010.
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Detailed Information Available
Virtual Copy Available at Google
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U.S. Cooperation with ASEAN — Mechanisms
ADVANCE Program (September 26, 2007)• Led by Nathan Associates
― With 15 US-based partners like East-West Center, Pacific
Disaster Center, Louis Berger, Social Impact
― And 6 regional partners like Kenan Institute Asia, Asia Disaster
Preparedness Center, Center for Strategic and International
Studies (Jakarta)
― Operates for up to 8 years
― Four projects
ASEAN-U.S. Technical Assistance and Training Facility
ASEAN Single Window Project
ASEAN Value Chain Project
Lao BTA Compliance/WTO Accession Project
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ADVANCE Activities of Interest to Business
• Technical Assistance and Training Facility (TATF)―The major part of our cooperation with ASEAN―Key work areas include industrial standards development,
trade facilitation, customs cooperation.―Organizes meetings with ASEAN technical and Ministerial
level officials―Arranges for business meetings with key ASEAN and
member government officials
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ADVANCE Activities of Interest to Business, cont.
• ASEAN Single Window: ―Support ASEAN goals to simplify submission, processing
and decision-making for import and export procedures ―Private sector consultations include email news, case
studies, brainstorming sessions, ASW web portal content requirements, etc.)
• VALUE Project:―Promotes integration of supply/value chains. ―Works with governments and companies.
• Lao Project:―Works with Lao officials on accession to WTO, ASEAN
Community, Bilateral Trade Agreement with the U.S.
Which Pressures Are Greatest?
Economic advantages
Sovereignty concerns
Indonesia’s “Post ASEAN” policy ?
Pressure from China
Pressure from other partners, Japan, U.S., EUIntra-ASEAN
disputes, Preah Vihear, SCS, etc.
Enhanced influence via G-20, UN, etc.
India?
Centrifugal Centripetal