ASEAN firm on free trade plan

ASEAN firm on free trade plan

SINGAPORE (Reuters): The Association of Southeast Asian Nations (ASEAN) senior officials at a heads of investment meeting yesterday stood solidly behind the push for oneness in their economies despite the current economic crisis.

"In these times there are bound to be voices calling for protectionism but if we do that it will be a step backwards. In this crisis we must push forward," Singapore Trade and Industry Minister Lee Yock Suan told reporters after opening the fourth meeting of the ASEAN Heads of Investment Agencies (AHIA) here.

"The key thing is to emphasize that ASEAN must continue to work together to open up our economies, liberalize and not pull back, that is why I emphasized in my speech the importance of the ASEAN Free Trade Area (AFTA) and the ASEAN investment area."

Lee had said in his opening speech the "contagion effect" of the crisis, which has spread to all the major ASEAN countries "vividly demonstrates ASEAN interdependence".

"Clearly it is in our collective interest to help one another through this economic crisis."

ASEAN groups the countries of Brunei, Indonesia, Thailand, Laos, Malaysia, Myanmar, Singapore, the Philippines and Vietnam.

Lee said that the ASEAN free trade area had made substantial progress since it was mooted and plans for the speeding up of the AFTA implementation target from 2008 to 2003 were on track.

He told reporters later that the regional crisis had not derailed the AFTA time frame for all the Asian countries including Indonesia.

"We are still on track...every country has to reckon with their own local problems and there is a lot of local pressure but on the while we are on track," Lee said.

"Even for Indonesia, the problem is not tariffs. The problem is more one of the financial situation and we need to get the trade (in Indonesia) going again," he said.

Lee said the plans for an ASEAN Investment Area first mooted during a Bangkok Summit in 1995 were also progressing and an agreement between the member countries would be finalized and signed at the ASEAN ministerial conference in Manila in October.

Lee's remarks were made at a time when political analysts are saying protectionist tendencies have emerged in the ASEAN region due to the economic crisis.

Protectionist

The Political and Economic Risk Consultancy (PERC) in its latest assessment of protectionist behavior of Asian countries cited Hong Kong and Singapore as the most open economies in the region.

The PERC report said Singapore was a victim of protectionist sentiments of its closest neighbors.

Responding to queries on the protectionism issue, Malaysian Industrial Development Authority chairman Zainal Abidin Sulong said:

"I don't want to use that word protectionist because it makes the wrong interpretation. If you think in terms of the Malaysian and Singapore economies...we move in the direction it has moved before, quite positive," he said.

ASEAN officials said they were optimistic any differences between ASEAN member nations would eventually be resolved for the long-term good of the grouping.

"People have thought that given the crisis each Asian country would want to be on its own and try to compete with each other but the contrary has come out," said Melito Salazar, vice- chairman of the Philippines Board of Investment and chairman of the AHIA meeting.

"Just last month we were together in Japan. The various heads of the ASEAN agencies got together with the Keidanren, the biggest federation of businessmen in Japan, and we gave a common pitch to them emphasizing the coming of age of the ASEAN Investment Area."

The ASEAN Investment Area will be set up to encourage and collectively promote foreign direct investment to the region.

Friday's one-day meeting will discuss issues related to promoting investments, including the implications of crisis and the measures the respective economies have taken, and explore further areas of liberalization and cooperation between the ASEAN nations, Salazar said.

Lee also said ASEAN leaders would be watching the developments in Japan very closely.

"Japan is very big. It accounts for two-thirds of Asian economies, so we are all looking to Japan to resolve its problems," he said.