ASEAN to accelerate economic integration
The Jakarta Post, Nusa Dua, Bali
ASEAN economic ministers agreed on Monday to accelerate the process of integrating the region's economies in a bid to lure new investments, Indonesia's Minister of Industry and Trade Rini Soewandi said.
She said that trade and investment activities in 11 leading industries will be fully liberalized by 2010, quicker than initially planned.
The agreement was reached at the ASEAN economic ministers meeting here. Rini said it would be recommended to the 10 ASEAN leaders during their annual summit on Tuesday in the popular resort island of Bali.
The Association of South East Asian Nations (ASEAN) has planned to create a single market by 2020 by gradually implementing various economic liberalization measures.
This plan is aimed at boosting trade activities in the region and increase the region's attractiveness as investment destination.
Rini, however, said that the economic ministers decided to accelerate this process on the key industries so that trade and investment activities in the region could be quickly increased.
The 11 industries are the automotive industry, electronics, wood-based, textile, rubber, airlines, tourism, health, agribusiness, e-business and fisheries.
Rini said the move should attract investors into the region as they could gain from economies of scale. Among the measures to be implemented is streamlining local customs procedures.
The above decision should send a positive signal to the investment community as it would be perceived by investors that ASEAN is strongly committed toward creating a single market.
Since the late 1990s economic crisis, the region has been losing out against China in terms of investment attractiveness as the latter had received the bulk of foreign direct investment into Asia during the past couple of years.
Government officials have also said that although the ASEAN Free Trade Area (AFTA) has been implemented since the beginning of this year as import tariffs on most products would be slashed to between zero percent and five percent, intra-ASEAN trade activities remained relatively small at about 21 percent of the region's total trade value each year.
This is partly because of lingering non-tariff trade barriers. The intra-regional trade value could potentially increase to 40 percent.
In comparison, intra-regional trade in the European Union trade block reached 70 percent.
Despite the benefits, however, some businessmen warned that inefficient industries could find difficulties in competing with their regional peers. They said that the government must work hard to help improve the domestic business climate by curbing corruption, illegal fees, resolving labor conflict and eliminating unfriendly regulations so that businesses can operate efficiently.
Rini said that Indonesia was ready to deal with the rising competition.