S'pore, Malaysia urged to push ASEAN forward

S'pore, Malaysia urged to push ASEAN forward

SINGAPORE (DPA): Malaysia and Singapore were urged on Saturday to push the Association of Southeast Asian Nations (ASEAN) forward in the face of economic competition from China.

"ASEAN must position itself as an alternative manufacturing base to China," Singapore Minister for Trade and Industry George Yeo told a conference in southern Malaysian.

Noting that Southeast Asia's share of foreign direct investment to East Asia, excluding Japan, halved to only 17 percent in 1999, Yeo told the meeting in Johor, across a narrow strait from Singapore, that Southeast Asia risked becoming an Asian backwater.

"Chinese competition is a big challenge" for the 10-member ASEAN, Yeo told the meeting on "Bridging the Gap".

"If Southeast Asia is divided and compartmentalized, and we are unable to exploit our different strengths by combining, we will be at a disadvantage.

"We must present the region as an integrated market and investment area."

ASEAN groups Singapore, Malaysia, Thailand, the Philippines, Indonesia, Brunei, Cambodia, Laos, Vietnam and Myanmar (Burma).

Yeo called for the removal of internal barriers to trade and investment through the ASEAN Free Trade Area.

He also said there should be joint promotion trips, continued engagement with China, Japan and South Korea and following up on China's suggestion for a China-ASEAN free trade agreement.

With Malaysia and Singapore the two best-performing economies in ASEAN, Yeo said the futures of both are also tied to developments in the region.

"The drama currently unfolding in Indonesia will affect both Malaysia and Singapore profoundly," Yeo said.

In many Asian countries, financial and corporate structures weakened by the last financial crisis will be knocked down again "if there is a serious global economic downturn this year".

Separately, Malaysia's trade minister said on Monday that Kuala Lumpur's compensation to Thailand for its move to opt out of a regional pact to cut tariffs on imported cars will involve trade benefits, and not cash payouts.

"No money is involved here," said Rafidah Aziz, adding that it would most likely involve issues such as whether Malaysia might increase its imports from Thailand.

Senior trade officials from Malaysia and Thailand last week held a two-day meeting in Kuala Lumpur on the compensation issue, the second round of such talks since Malaysia last year got ASEAN's approval for a two-year grace period to continue keeping high import duties on foreign car imports until 2005.

Under the ASEAN Free Trade Agreement (AFTA), the regional grouping's six biggest economies agreed to slash tariffs on imported cars to between zero and five per cent by 2003.

However, Malaysia said it could only liberalize by 2005 because its two national automakers, Proton and Perodua, needed some time to compete against the giant foreign car makers.

The Malaysian-made vehicles have been the best-selling cars in the country for years because the government imposes high import duties of up to 300 per cent on foreign imports.

However, Malaysia's decision to temporarily opt out of the AFTA scheme angered Thailand, where major foreign automakers have in recent years opened up manufacturing plants to take advantage of the region's liberalized automobile sector.

Kuala Lumpur later agreed to compensate Thailand for any losses sustained to its auto sales during the two-year period.