ASEAN leaders, businesses differ on economic integration drive

ASEAN leaders, businesses differ on economic integration drive

The Jakarta Post
Nusa Dua, Bali

While 10 ASEAN leaders gathering here for an annual summit
endorsed a proposal from their economic ministers to speed up the
liberalization process in 11 priority industries, hundreds of the
region's business leaders gathering at a next hotel wanted to
focus first on two sectors: agriculture and tourism.

"At the governmental level, the decision is to move quickly on
the 11 sectors, which include tourism and agriculture. But for
the business people, given the fact that they have limited time
and limited resources ... They just said: let's focus on tourism
and agriculture first," Association of South East Asian Nations
(ASEAN) Secretary-General Ong Keng Yong told a press conference
on Tuesday at the end of a three-day ASEAN Business and
Investment Summit (ASEAN-BIS), which the organizing committee
said involved 700 businessmen.

The regional grouping's first business and investment summit
was organized by the ASEAN Business Advisory Council (ASEAN-BAC),
a unit of the grouping which advises governments in the region on
how to resolve problems faced by the business sector. The summit
was being held at the same time as the ninth ASEAN leaders summit
ending on Wednesday. Seven ASEAN leaders and four leaders from
the region's key trading partner countries -- Japan, China, India
and South Korea -- spoke at the business summit.

The ASEAN leaders endorsed a framework, called Bali Concord
II, on how to realize the ASEAN Vision 2020 which includes
creating a security community, economic community, and social and
cultural community.

The economic community vision envisages "a stable, prosperous
and highly competitive ASEAN economic region in which there is a
free flow of goods, services, investment, labor and a freer flow
of capital." The goal is to create a single market and production
base by 2020 by adopting relevant economic liberalization models
and principles of other regional trade arrangements, particularly
of the European Economic Community in the 1960s-1970s.

On Monday, a day before the ASEAN leaders started their
summit, the region's economic ministers reached an agreement to
speed up the liberalization drive in 11 key industries: trade and
investment activities in the sectors will be fully liberalized by
2010, much earlier than the original 2020 deadline. This was
endorsed by the grouping's leaders on Tuesday.

The 11 sectors are wood-based products, automotive, textiles
and apparels, fisheries, electronics, healthcare, air travel and
tourism, and e-business.

According to Ong, the reason behind the move to advance the
integration deadline in the sectors is as follows: For the past
year, ASEAN, Japan, China, and India have been in talks to create
Free Trade Areas (FTAs) by between 2010 and 2012. This means that
the 2020 deadline would no longer be relevant as markets would
have already been opened eight years before this deadline.

Thailand Prime Minister Thaksin Shinawatra and Singapore Prime
Minister Goh Chok Tong were the first to propose the acceleration
in the liberalization deadline of the 11 sectors.

"If we can finish discussions with China, India and Japan by
2010-2012, why wait for another eight years. They (ASEAN leaders)
generally agree with this idea," Ong said.

He added that in general, the ASEAN leaders were committed to
advance the 2020 deadline for other sectors as well. "The problem
is how fix a new date ... It should be 2020 minus something. But
what is the minus something, the ministers will discuss it again.
2020 is no longer (relevant) due to all these discussions with
the economic trading powers."

Elsewhere, Ong said the new members of ASEAN, including
Cambodia, Laos, Myanmar, and Vietnam, remained committed to the
economic integration drive. The economies of these countries are
relatively less-developed that the other six ASEAN members.

A high level task force set up by ASEAN has recommended that
flexibility be allowed in the implementation of the economic
integration plan.

Results of ASEAN-BIS

- Business leaders agree to accelerate liberalization in
agriculture and tourism sectors
- Business memorandum of understandings involving several
companies
- ASEAN heads of government agree to appoint "focal points" that
would discuss ways with ASEAN-BAC on how to resolve problems
faced by the business sector

Major economic agreements at ASEAN Leaders Summit

- Bali Concord II, which includes framework on the economic
integration plan (endorsed on Tuesday)
- Establishment of a rubber consortium involving Thailand,
Indonesia and Malaysia
To be endorsed on Wednesday:
- Acceleration of liberalization drive in 11 key industries
- ASEAN-Japan Comprehensive Economic Partnership (covering a plan
to set up a Free Trade Area/FTA by 2012)
- ASEAN-India Comprehensive Economic Partnership (covering a plan
to set up an FTA by 2011)
- ASEAN-China Comprehensive Economic Partnership (including
amendment of last year's agreement to set up FTA by 2010)