Creating a common market in ASEAN region

Creating a common market in ASEAN region

Alan Cassels, Senior Technical Advisor, PT Birotika Semesta/DHL Express,
Jakarta

As political and business leaders from the Association of
Southeast Asian Nations gather in Bali for the ninth ASEAN
Summit, they will chart the region's economic destiny in the
coming decades if they endorse the concept of an integrated ASEAN
Economic Community (AEC).

With the implementation of the ASEAN Free Trade Area (AFTA) in
January 2003, tariff on goods entering the ASEAN-6 -- Thailand,
Malaysia, Singapore, Brunei, Philippines and Indonesia -- will be
lowered to between 0 percent and 5 percent.

The six nations have also committed themselves to remove all
remaining tariffs on intra-ASEAN trade by 2010. The regional
grouping now is taking another giant leap to position itself to
compete on a global scale with other economic powers.
Removing tariffs is crucial. However, it is only the first stage
in integrating the economies of the region.

What must also happen, however, is for economic integration to
move from just an idea that is discussed at the political level
to a level where businesses can realize tangible benefits from
this ambitious vision.

The business community must play a leading role in the process
of closer economic integration within the region. While officials
can set directions, it is businesses and companies that operate
and trade in the region who are the best placed to determine how
integration should be achieved.

The idea to hold an ASEAN business and investment summit in
conjunction with the leaders' summit is not only timely but
critical for closer communication and understanding between
political and business leaders. With their hands-on experience in
dealing with cross border trade and investment flows, businesses
must be part of the decision making process so that practical
solutions can be arrived at.

The region as a unit also needs to push ahead to liberalize
sectors such as logistics, telecommunications, financial, legal
and other professional services. Only by allowing the free
movement of goods, services and human resources within the region
can ASEAN fully benefit from closer economic integration.

For example, one of the key concerns amongst ASEAN governments
over the past few years has been the drop in foreign direct
investments into the region as China has drawn proportionately
more investments than ASEAN countries after 1997.

The reasons for this phenomenon are many but given the fact
that ASEAN's economic institutions are more developed than
China's, this trend can be reversed if the region's government
leaders sit down with businesses to come up with more-business
friendly investment policies.

It has been proven over and over again that greater trade and
investments flows lead to greater prosperity for the people as a
whole. And ultimately it is businesses that trade and invest
cross border, not governments.

We are now operating in a global marketplace where goods,
capital and human talent can move across geographical boundaries
at unprecedented speed. Competition for investments and human
resources is now keener than ever and ASEAN has to compete not
only with China and India but the likes of the U.S. and Europe.

But competition for investments and talent is not a zero sum
game. ASEAN can still benefit from globalization even as China
and India temporarily steal the limelight -- but only if the
regional grouping stays cohesive and charts a common strategy.
The push to create one economic sphere within the Southeast Asian
region could not therefore have come sooner and could prove
pivotal in determining the fate of the association's 10 member
countries.

With the rise of China in north Asia and the rapid economic
expansion of India to the West, ASEAN is now at a critical
crossroad not just in determining its political and economic
future but its very reason for existence.

Individually, member countries will be overwhelmed by the
economic giants to the north and to the west if they choose to go
it alone. Collectively, the region is well poised to compete and
ride on the growth of the twin economic engines of China and
India.

Thus the AEC is an idea whose time has come. With a population
of some 500 million people and a combined gross domestic product
about equal to China's, ASEAN is not an economic lightweight. If
the grouping is able to integrate the economies of its 10 members
more closely and lower trade barriers totally, the region will be
able to fully harvest its vast potential.

Ultimately, for the AEC concept to succeed, it will require
both government leadership and private sector expertise. Without
such close cooperation, ASEAN stands to lose this historic
opportunity to firmly establish itself as a global economic
heavyweight.