Unlocking ASEAN's economic competitiveness<\/p>\n
Alan Cassels, Jakarta<\/p>\n
With a population of about 500 million, a combined gross
\ndomestic product of US$737 billion, and a total trade of $720
\nbillion, ASEAN today is very much an economic force in the global
\narena.<\/p>\n
Against the backdrop of economic growth, there has been a
\nstrong positive shift in the drive towards economic integration
\nwithin ASEAN. This is reflected in the rapid growth of intra-
\nASEAN trade supported by enhanced cooperation at the governmental
\nlevel.<\/p>\n
However, with the rapid economic renaissance of China in
\nrecent times, foreign direct investment (FDI) flows into ASEAN
\nhas slowed in comparison to China, which is being viewed as
\nincreasingly attractive as a FDI destination. Today, China is
\nattracting more FDI than all the other Asian countries combined,
\nnot least ASEAN.<\/p>\n
The world's fastest growing economy registered FDI of $53.51
\nbillion in 2003, according to China's Ministry of Commerce. This
\ncompares with $20.3 billion in ASEAN FDI flows over the same
\nperiod.<\/p>\n
The economic emergence of China and India can be seen both as
\na challenge that poses formidable competition to ASEAN member
\ncountries as well as an opportunity for ASEAN.<\/p>\n
To address the economic competition posed by China and India,
\nASEAN needs to understand - on a macro level -- the contributing
\nfactors to their success. These include a large market, low cost
\nlabor, cheap land and a large concentration of supporting
\nindustries.<\/p>\n
By contrast, while ASEAN also possesses many of these core
\nattributes, its strengths lie in pockets of strong competencies
\nin, for example, electronics, petrochemicals and automotive
\nindustries.<\/p>\n
In light of this, perhaps the vision for ASEAN would be to
\nmove towards a boundary-less manufacturing and production
\nplatform in an integrated market.<\/p>\n
As ASEAN works towards this, the logistics industry can play
\nan important role as a crucial link in moving raw materials and
\nfinished goods between these pockets of competence within the
\nregion. Moreover, the effective application of supply chain
\nmanagement, companies can harness collectively the specific
\ncompetencies of the different areas in ASEAN; for example, by
\nstreamlining supply chains that span across borders in ASEAN and
\nproviding distribution services to markets in all ASEAN countries
\nseamlessly.<\/p>\n
There must also be close collaboration between the private
\nsector and ASEAN regulators to facilitate the seamless movement
\nof goods across borders.<\/p>\n
For example, ASEAN must continue to liberalize its market. Air
\ntransport is both the most regulated and the highest value-added
\nform of transportation, and, as such, it should be part of any
\ntrade liberalization regime.<\/p>\n
The Common Effective Preferential Tariff (CEPT) rules of
\norigin will enable more companies to qualify for the lower CEPT
\ncompared with the higher Most Favored Nation (MFN) tariff rates.
\nThis will in turn promote greater trade flows between ASEAN.<\/p>\n
The agreements signed by China and ASEAN in Laos at the recent
\nASEAN Summit will take the two sides further towards the goal of
\nsetting up the world's largest free trade area by the end of the
\ndecade.<\/p>\n
For ASEAN to reach its full potential as a trade and
\ninvestment hub in Asia, the development of efficient, secure and
\n"world class" customs across industry supply chains is an
\nimportant challenge and opportunity. A streamlined and uniform
\nset of customs guidelines and procedures across ASEAN would
\nbenefit companies through greater transparency and efficiency as
\nwell as facilitating the flow of goods across national borders.<\/p>\n
In addition to the 'single window' approach which includes the
\nelectronic processing of trade documents at national and regional
\nlevel, perhaps an e-customs platform could be implemented across
\nASEAN in time, thus expediting a more efficient process in going
\npaperless.<\/p>\n
A key to achieving this -- and hence unlocking ASEAN's
\ncompetitiveness is for ASEAN to move towards a boundary-less
\nmanufacturing and production platform in an integrated market.<\/p>\n
To this end, the logistics industry can play an important role
\nby harnessing the specific competencies of the different areas in
\nASEAN effectively, designing and managing supply chains that span
\nacross borders in ASEAN, enabling the distribution of parts and
\nfinished goods across markets in all ASEAN countries seamlessly
\nand in particular, to capitalize on the tremendous opportunities
\nemerging from the development of China and India.<\/p>\n
The writer is Senior Technical Advisor, PT Birotika
\nSemesta\/DHL Express.<\/p>",
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