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.