ASEAN tiger burning bright again

ASEAN tiger burning bright again

Narendra Aggarwal, The Straits Times, Asia News Network, Singapore

Southeast Asia, the tiger that lost its stripes, is back with
a roar. Five years after the outbreak of the Asian financial
crisis in 1997, the region is fast regaining its reputation as an
economic area with a bright future.

Among others, its regional neighbors -- formidable economies
in their own rights -- are proving keen to deepen economic ties
with this market of 500 million people.

At the just-concluded 34th ASEAN Economic Ministers meeting in
Brunei, the emerging powerhouse of China, along with Japan, South
Korea, India, Australia and New Zealand, were all courting the
10-nation grouping.

They came dangling ties of all forms -- free trade agreements
(FTAs), closer economic partnerships and bilateral regional trade
and investment treaties.

Whatever the name, the bottom line was the same: ASEAN's
neighbors wanted mutual trade barriers to be brought down so
goods can move more freely between them and Southeast Asia. With
an eye on the future, they also pushed for the "free trade"
concept to cover services and investments.

Why is ASEAN -- consisting of Brunei, Indonesia, Malaysia, the
Philippines, Singapore, Thailand, Cambodia, Laos, Myanmar and
Vietnam -- suddenly so attractive?

A big reason is that Southeast Asia is well on its way to
becoming one trade area as envisaged under the ASEAN Free Trade
Area (AFTA) agreement. The older ASEAN members are very close to
the finish line, having lowered tariffs on 98 percent of the
goods imported by them to 5 percent or below on average.

The four newer members -- Cambodia, Laos, Myanmar and Vietnam
-- have been given more time to lower their tariff barriers and
become fully integrated in AFTA.

Solid evidence of the attractiveness of ASEAN comes from a new
study which shows that foreign direct investment rose a robust 13
percent to US$13 billion last year.

No doubt, the bulk of this was reinvestment. But the fact that
foreign investors chose to plough their earnings back in the
region is a huge vote of confidence in ASEAN. It is also very
encouraging that most of the money went to new projects, instead
of buying existing businesses.

As for FTAs, there seems to be a race among the regional
economic powers to cement their relations with ASEAN. China hopes
to conclude one within 10 years. As FTA negotiations can often be
protracted, it has promised an "early harvest" in the form of
tariff-free access for selected goods as early as 2004.

Spurred by China's swift action, Japan has also jumped into
the fray. Though a late starter, Tokyo is seeking a "Closer
Economic Partnership" with ASEAN through a pact that will include
elements of an FTA, and it is even willing to include the
sensitive area of agriculture in the negotiations.

Malaysia, too, has done a about-turn on FTAs. Once openly
critical of Singapore's push for bilateral FTAs, Minister for
International Trade and Industry Rafidah Aziz now expresses
unqualified support for the FTAs being sought with ASEAN.

Not to be left out, India now wants to join AFTA. Its claim is
based on it having a long common border with Myanmar. That
application will be examined at the coming ASEAN leaders' summit
in Cambodia in November.

These developments are a big plus for Singapore's push for
free trade agreements. The ASEAN Economic Ministers meeting in
Brunei showed that the 10-nation grouping is back in business.
The tigers are burning bright.