ASEAN plugs on with free trade as Indonesia roils

ASEAN plugs on with free trade as Indonesia roils

SINGAPORE (Reuters): Southeast Asian economic chiefs meet in Singapore this week to pursue an ambitious free trade plan as the region strives to overcome its economic woes and Indonesia roils with internal strife.

"The very fact that the Indonesian government is about to change makes it difficult for any decision by the meeting to be really believable," said Bruce Gale of the Political and Economic Risk Consultancy, a Hong Kong-based think tank.

Indonesia, which saw days of riots in Jakarta last week sparked by an unpopular new security measure, held parliamentary elections in June and is to choose a new president in November.

But Singapore officials told reporters ahead of the 31st Association of South East Asian Nations (ASEAN) Economic Ministers meeting beginning on Monday the 10-nation group was on track with and may even accelerate its regional free trade plan.

The ASEAN Free Trade Area (AFTA) aims to slash tariff barriers for a wide range of goods to between five and zero percent for most of its member countries by 2003.

"The idea is to achieve, for the founding six countries of ASEAN by 2002, 60 percent of the inclusion list," said Tay Thiam Peng, deputy secretary, trade and regionalization, with Singapore's trade and industry ministry.

"It is still at the proposal stage...but it is certainly a proposal that we are aiming towards," Tay said.

He said ASEAN wants founders Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand to meet the zero-to-five percent goal by 2003.

New members would have more time: Vietnam until 2006, Laos and Myanmar until 2008, and Cambodia until 2010. But the members approach to the tariff cuts have been uneven.

Malaysia recently proposed delaying tariff cuts on automotive parts, while Thailand offered to reduce tariffs on an additional 1,190 items to show its commitment to AFTA.

Cambodia said last month it was reducing its reliance on import taxes to be able to cut tariffs to meet AFTA requirements.

But ASEAN was expected to back Singapore Prime Minister Goh Chok Tong's proposal for a joint investment roadshow to promote the region as a common market to investors in North America and Europe.

"That is something ASEAN is always good at doing -- presenting an outside face to the world to present their common interest," Gale said.

Tay also said the worst appeared to be over for Indonesia, one of the nations hardest hit by the Asian economic crisis.

"We have seen the worst as far as Indonesia is concerned... If we look at the trade figures of Indonesian exports and imports over the last six months, they have been growing at double digit rates, more than 10 percent a month," he said.

Political analysts also said the turmoil in East Timor was unlikely to be discussed at the ASEAN meeting.

"I think they don't want to embarrass Indonesia. It is the tradition of not wanting to have other members lose face," said Chaiwat Khamchoo, head of International Relations at Chulalongkorn University.