ASEAN signs integration plan for priority sectors

Zakki P. Hakim, The Jakarta Post, Jakarta

Trade ministers of 10 ASEAN member countries signed on Friday a framework agreement to accelerate the integration of 10 economic sectors in the region in a bid to boost trade and investment.

The trade and investment liberalization plan was agreed to during the first day of the 36th ASEAN Economic Ministers (AEM) meeting here.

The 10 sectors are expected to be integrated by 2007 within the six founding members of ASEAN -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The four new members of ASEAN, Vietnam, Cambodia, Laos, and Myanmar, have until 2012 to fully integrate.

Officials declined to unveil the roadmap for the integration process. ASEAN leaders are expected to approve the roadmap at their November summit in Vientiane, Laos.

The 10 sectors are agriculture, the automotive industry, "e- ASEAN" or information technology, electronics, fisheries, healthcare, textiles and apparel, tourism, rubber and wood-based products.

During the previous summit in Bali last year, ASEAN leaders agreed to integrate the region's economies to form an ASEAN economic community by 2020, when the region of some 520 million people would become a single market and production base similar to the European Union, characterized with a freer flow of goods, services, investment and skilled labor.

The community is being created to make the region more attractive to global foreign direct investment at a time when it is facing tough competition from China and India.

In a bid to accelerate the integration process, ASEAN leaders had initially agreed to speed up the liberalization process for 11 priority sectors, including air travel, in which ASEAN members were considered to hold a competitive advantage.

Air travel, however, had been temporarily excluded from the liberalization drive and would be considered separately by the region's transportation ministers, Indonesia's Minister of Industry and Trade Rini MS Soewandi said following the Friday meeting.

Should the ministers fail to agree on conditions for the sector before the November summit, the region's leaders would likely have the final say on whether to include it in the integration process, ASEAN secretary-general Ong Keng Yong said.

The decision on Friday, Ong said, was positive as some senior officials had previously indicated four of the 11 sectors -- agriculture, fisheries, wood and air travel -- would be excluded from integration because of "complicated problems" which include the vast number of products within the sectors and high workers involved.

Ong said the integration roadmap covered harmonizing rules on trade and investment and cutting down red tape.

It aimed to establish a single common product test procedure making it easier and faster for producers to move their goods from country to country, he said.

Director general for international cooperation at the Indonesian Ministry of Industry and Trade Pos M. Hutabarat said ASEAN ministers also agreed to exclude certain "sensitive" products from the liberalization process.

Each country could put an average of 15 percent of the total products in each sector on this sensitive list, Pos said.

The 11 sectors cover 1,400 products; about 13 percent of the estimated 11,000 products traded within the region.

The government would invite businesses and associations to submit their lists of sensitive products for consideration before the November summit, Pos said.

Trade within the ASEAN region is projected to increase from 23 percent of the region's total trade last year to 27 percent next year (not 2007 as previously reported). ASEAN exports to world were valued at US$403.39 billion last year.

Meanwhile, FDI to ASEAN countries last year reached $20.3 billion, compared to $53 billion received by China.