ASEAN faces export challenge
ASEAN faces export challenge
JAKARTA (AFP): ASEAN economies face the challenge of
maintaining their edge in exports, the engine of their rapid
growth, as domestic constraints increase and competition from
Asian rivals heats up.
Economists say the first signs of a slowdown from years of
fast export growth are now visible and warn that the Association
of Southeast Asian Nations (ASEAN) cannot dismiss it as a mere
blip.
The Jakarta-based ASEAN secretariat has projected collective
export growth for six of the seven ASEAN members to slow a shade
from 20 percent in 1995 to a still healthy 16 percent in 1996 at
350 billion US dollars.
But the forecast -- which excludes ASEAN's newest member,
Vietnam -- did not factor in a steep fall in external electronics
demand hurting the group's exports.
Electronics is a key item in the export basket of Singapore,
the region's biggest trading nation, as well as neighboring
Malaysia and Thailand.
ASEAN, ended an annual ministerial meeting here yesterday,
groups the three countries with oil-rich Brunei, Indonesia, the
Philippines, and Vietnam which joined the organization only last
year.
As a bloc, ASEAN is the fourth largest trader after the United
States, Japan and the European Union, with two-way trade this
year estimated at 700 billion dollars.
Indonesian economist Raja Silalahi said that, besides the
slowdown in the volatile electronics market, infrastructure
constraints and other bottlenecks were beginning to affect
ASEAN's competitiveness in trade.
He also cited increasing competition from lower-cost locations
elsewhere in Asia, including Myanmar, which is aspiring to join
ASEAN. Vietnam, too, is posing competition to the more mature
ASEAN economies, he said.
"The cost of labor there is lower, the cost of capital also,
and other things like land are cheaper," he said.
"They take a share of the market and reduce our (ASEAN)
exports," said Silalahi. "We will face problems competing in the
market."
Investment house J.P. Morgan warned in a recent report: "It is
the rise of nearby rivals and its own infrastructure and labor-
force bottlenecks that threaten ASEAN's high export growth in the
future."
Economists said ASEAN members should move to deal with the
bottlenecks and arrest the export slowdown before they blunt the
group's competitive edge.
"ASEAN should be concerned. It may reflect some factors like
under-investment in infrastructure," said Robert Tay, an
economist with the ASEAN secretariat.
"For a number of years, ASEAN exports have grown in a
consistently higher plane compared to OECD (Organization of
Economic Cooperation and Development) economies," he said.
"This downtrend or (eventual) convergence to the world average
may be expected over a period of time."
Projected exports for the year, without taking into account
the electronics slowdown, are impressive.
Brunei's exports are projected by the secretariat to rise to
2.7 billion dollars from 2.5 billion dollars last year,
Indonesia's from 45.3 billion dollars to 51.9 billion dollars and
Malaysia's from 71.5 billion dollars to 86.2 billion dollars.
The Philippines' exports are expected to rise from 16.6
billion dollars to 19.8 billion dollars, Singapore's from 111.9
billion dollars to 130.9 billion dollars and Thailand's from 56.2
billion dollars to 57.9 billion dollars.
Current account deficits were projected by the ASEAN
secretariat to decelerate -- from 11.4 billion dollars in 1995 to
4.2 billion dollars in 1996.
Indonesia, the Philippines and Thailand would record lower
deficits while Brunei and Singapore were expected to increase
their surpluses.
A senior Indonesian official said the export growth slowdown
was worrying.
"We are hoping it is temporary," he said. "But we need to do
something -- increase trade within ASEAN and form strategic
alliances -- to compete," he said.