The Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China finally signed a comprehensive economic deal on Saturday after seven years of negotiations.
China is ASEAN’s eighth largest investor with accumulated investments of US$6.1 billion as of 2008, while the 10 ASEAN member countries invested a total $5.6 billion in the same year.
Signed by economic ministers from ASEAN’s 10 member countries and the PRC’s Trade Minister Chen Deming, the agreement is expected to boost trade and investment.
“The core point is not liberalization, but investment facilitation, promotion and the creation of legal certainty,” said the Indonesian Trade Minister Mari Elka Pangestu, after the signing in Bangkok. “Now we have a clear platform to develop economic integration with one of the world’s key economic players.”
The investment pact is the third free trade agreement between China and ASEAN.
The agreement, she said, provides opportunities for ASEAN member countries - Brunei, Indonesia, Malaysia, Singapore, Thailand, Vietnam, Laos, the Philippines, Myanmar and Cambodia - to attract more direct investment from China.
Mari said China’s investment within ASEAN was not yet comparable to that of other East Asian countries including Japan and Korea, but was steadily increasing.
China’s investment in Indonesia was $31.5 million in 2006, but increased to US$139.6 million in 2008, according to data from the Investment Coordinating Agency (BKPM).
Mari said this excluded the nearly $2 billion worth of acquisition that the PRC had in the oil sector as well as its participation in the 10,000 megawatt power plant projects across Indonesia.
“The PRC is also involved in the Suramadu bridge project,” she added, referring to the 5.4-kilometer bridge connecting Java and Madura Island, the longest so far in Indonesia. It was opened in June by President Susilo Bambang Yudhoyono.
Mari said China also reiterated commitment to providing ASEAN with $15 billion in loans to build infrastructure facilities to link ASEAN member countries and China.
She added that Indonesia had proposed infrastructure development in the Indonesia-Malaysia-Thailand Growth Triangle area and in the Brunei Darussalam, Indonesia, Malaysia and the Philippines area - the East ASEAN Growth Area.
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