EIU says ASEAN a profitable region

EIU says ASEAN a profitable region

JAKARTA (JP): Foreign enterprises can expect greater profits
when doing business in the Association of Southeast Asian Nations
(ASEAN) than elsewhere in Asia, a report says.

According to Planning for Asean, the latest report from the
Economist Intelligence Unit (EIU), while smaller in population
than China and South Asia, ASEAN is much richer if measured by
per capita gross domestic product (GDP).

"The United States Bureau of Commerce data indicates that
foreign investors have received higher returns in ASEAN than
elsewhere in Asia," the report said.

The report said that over the next five years, ASEAN and China
would be close rivals for the title of fastest growing sub-region
in Asia.

ASEAN per capita GDP is estimated at US$1,700 for 1997. From
1988 to 1996, real per capita GDP in ASEAN grew by more than 50
percent, compared with Australasia which barely managed a 10
percent increase over the same period.

"Though jobs are plentiful in ASEAN, income disparities are
widening and a new economic elite is arising. Indonesia, for
example, which has one of the lowest levels of per capita GDP in
ASEAN also has the largest number of billionaires in Southeast
Asia," the report said.

The EIU report stressed the need for companies to develop a
business strategy to prepare for free trade within ASEAN -- one
of the world's fastest growing regions.

ASEAN comprises Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam. Cambodia, Laos and Myanmar are
to join soon in July. The region is home to a growing consumer
market of more than 420 million people.

Under the ASEAN Free Trade Area (AFTA), launched in 1993,
ASEAN leaders agreed to lower internal tariff and trade barriers
by 2003. The leaders also called for a common investment policy.

"The results will be a unified market with more people than
North America. AFTA planners hope free trade will boost foreign
direct investment, which will in turn stimulate the growth of
domestic support industries," the report said.

The Common Effective Preferential Tariff (CEPT) is the main
instrument for turning ASEAN into a free-trade area. Under the
CEPT, regional import tariffs will be reduced to between zero and
5 percent on all manufactured goods, while other non-tariff
barriers will be removed.

The EIU report said that while all ASEAN's previous attempts
at economic and trade cooperation had been failures, there were
reasons to be confident that AFTA would succeed.

First, ASEAN's five large economies have matured and become
more complementary with one another in the recent past.

Second, when Intercedent Asia and the EIU surveyed 150
companies and asked about the prospects of AFTA, the Asia Pacific
Economic Cooperation (APEC) forum and the East Asia Economic
Caucus (EAEC) -- all of which were established as "effective
regional groupings" -- AFTA generated the greatest optimism.

"As the size and structure of the market changes and customers
shift their locations, companies must integrate AFTA into their
strategic plans to avoid losing ground," the report said. (pwn)