Thu, 30 Jan 2003

ASEAN needs to strengthen ties to lure investments

Fadli and Arya Abhiseka, The Jakarta Post, Jakarta

The Association of South East Asian Nations (ASEAN) needs to strengthen cooperation among members to offer an attractive business environment for investors, a Singapore minister says.

Singapore's Minister for Trade and Industry George Yeo said the regional free trade area could become unsubstantial as China and India also entered the global marketplace offering very low costs of production, unless every member of ASEAN was ready to combine its markets.

"We have to integrate ASEAN further so that we have a single economic space of 500 million people," he said.

ASEAN groups Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.

Yeo said that Southeast Asia would remain competitive in the manufacturing sector, despite China's rapid growth of industries, as the region possessed a longer history in advanced manufacturing and well-developed knowledge clusters.

He said a proposed free trade area between ASEAN and China should benefit products from Southeast Asia, as it opened greater access to the giant Chinese market.

However, he said if ASEAN was fragmented into ten separate economies, each would not be able to play at full strength.

He pointed out a successful model of development cooperation between Singapore and Indonesia's Riau province.

The flow of investment into Batam and Bintan islands in Riau province remains healthy despite various uncertainties in Indonesia.

Last year, the two islands attracted more than US$300 million worth of investment from more than 570 foreign companies.

Singapore recorded a total investment of $1.7 billion, the largest among other nations, due to its close proximity to both Batam and Bintan.

The two islands are 20 kilometer away from Singapore and can be reached by a 40-minute ferry ride.

Recently, Singapore's Nam Lee Pressed Metal Industry and Cheng Heng Paper Product opened two factories and invested about $224 million in the two islands.

Yeo said that when the Singapore Economic Development Board included Batam and Bintan in its business proposals, investors responded with enthusiasm.

He added that Singapore's bilateral free trade agreement with the U.S. would greatly contribute to the islands' economy.

Moreover, Yeo said that what has been established in Riau should be an example for other parts of ASEAN.

"Synergistic cooperation is win-win." he said.