ASEAN breaks with tradition, allows liberalized markets
ASEAN breaks with tradition, allows liberalized markets
Jalil Hamid, Reuters, Genting Highlands, Malaysia
Southeast Asian nations decided on Saturday to break with tradition by adopting a new formula to speed up market-opening and keep up with growing competition from powerhouses like China.
Economic and trade ministers from the 10 member Association of South East Asian Nations (ASEAN) said a so-called "10 minus X" principle would be adopted in areas such as open-sky policy, telecommunications, financial services and equity investment.
Under the formula, member countries that are ready to open up their markets can move forward without having to wait for rest -- a departure from the normal procedure of moving together.
"Those who are ready can go first and those who are not can come on board as and when they are ready," Malaysia's International Trade and Industry Minister, Rafidah Aziz, told a news conference at the end of the one-day meeting at the Malaysian resort of Genting Highlands.
"It's a more pragmatic way of implementing some of the programs."
Her Singapore counterpart, George Yeo, hailed the agreement as a "breakthrough" and said the plan would overcome delays faced by some countries in areas like aviation and telecommunications.
"Some countries are understandably less prepared to move now than others," he said of the open-sky policy which allows foreign carriers to pick-up passengers from any destination within ASEAN.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The move to hasten liberalization comes as the region battles to regain its investment charm amid rising competition for funds from China and other parts of the world.
Last year, much of the foreign direct investment in Asia went to China. A low cost base is seeing it displace Southeast Asia as the continent's preferred manufacturing hub, economists say.
A World Bank report in March said China attracted US$44 billion of Foreign Direct Investment last year, up 16 percent from 2000. Thailand's share fell 32 percent.
The ministers earlier met top executives from U.S. consulting firm McKinsey & Co. The firm is doing a nine-month study for ASEAN on how the region can boost its competitiveness. At the same time, ASEAN is also conducting its own study comparing its own trade and investment policies with those of China.
Singapore's Yeo said currently it was easier for individual member countries to invest in and trade with China rather than among themselves.
"This is because we have been too leisurely in our internal liberalization process," he said.
Separately, Rafidah said ASEAN auto producers had no basis to demand compensation for Malaysia's move to delay tariff cuts on imported cars by two years to 2005.
Under the ASEAN Free Trade Agreement, members are due to reduce tariffs next year to between zero and five percent on cars made within the region, but Malaysia has said it needed more time to prepare state controlled car maker Proton for competition.
"At the moment, none of the ASEAN countries, whether Thailand or any other country, is a principal supplier of automotive products to Malaysia," she said. "On that basis alone, there is no standing to demand anything from us."
Foreign auto giants such as Ford [F.N] and General Motors [GM.N], which have plants in Thailand, have complained that Malaysia's delay effectively denies them greater access to Southeast Asia's biggest car market.
The economic ministers, who said the region's economic recovery was on track after last year's U.S. led slowdown, will meet again in Brunei in Sept. 11-15.