S'pore warns against ASEAN protectionism
S'pore warns against ASEAN protectionism
SINGAPORE (AFP): Singapore urged fellow Southeast Asian
nations Thursday to step up economic reforms despite the easing
of a severe crisis, warning that a slide into protectionism would
be ineffective and costly.
As signs of resistance to short-term tariff reduction emerged
in the region, Prime Minister Goh Chok Tong stressed the need for
more aggressive liberalization efforts by the Association of
Southeast Asian Nations (ASEAN).
Opening annual talks of trade ministers from the 10-member
group, Goh said the political transition in Indonesia, a slowdown
in major export markets and geopolitical factors posed challenges
to Southeast Asia's economic rebound.
"Positive signs of recovery in the region have raised hopes
that things will get better. But to conclude that we can now slow
down the pace of liberalization is to draw the wrong lessons from
the crisis," he said.
Two years after regional economies were shaken by currency
turmoil, output growth has returned, exchange rates have largely
stabilized, inflation has been tamed, and exports are growing
strongly. The International Monetary Fund estimates growth in
ASEAN countries this year to average 2.6 percent.
"Despite these improvements, I would caution against any hasty
conclusion that things would only get better," Goh said.
"ASEAN faces both internal and external challenges," he added,
noting that foreign investment and bank lending activities
remained weak.
He said regional political stability "will be a crucial
factor" and that developments in Indonesia, the largest ASEAN
member with two-fifths of its population, will be closely watched
by investors.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Together they have some 500 million consumers and a gross
domestic product of US$700 billion.
Goh said the health of the US, Japanese and Chinese economies
would affect ASEAN's prospects, and stressed the importance of a
stable relationship among the three Asia-Pacific powers.
"An unstable one will snuff out economic recovery in the
region," he said.
Goh brought up the challenge posed by other regions also
opening up their markets, and the danger of protectionism within
ASEAN.
"We could risk being sidelined in the next wave of economic
growth, or worse, hollowed out as foreign trade and investments
flow to those economies," he said.
"Protectionist policies aimed at stemming foreign competition
have not been viable in the past, and such a response in ASEAN
will be counter-productive to our efforts to grow our economies,"
Goh said.
Goh did not single out any country but on Wednesday, Malaysia
confirmed it would shield its vital automotive industry from a
tariff-reduction scheme aimed at creating an ASEAN Free Trade
Area.
Malaysia's Trade and Industry Minister Rafidah Aziz said her
country was unlikely to include cars in the tariff-slashing plan
that was to become operational on January 1, 2000. Malaysia slaps
heavy duties on imported cars to protect its national car Proton.
Indonesia, the worst hit by the economic crisis in the region,
also indicated it could defer opening up its car market.
Goh reiterated his call for a joint ASEAN marketing campaign
in industrial countries in the form of investment roadshows.
"This specific proposal is aimed at showing that ASEAN is back
in business," he said.
Despite the car tariff-slashing snag, ASEAN members have
reiterated their long-term goals.
They agreed Wednesday to expand a cross-investment scheme and
to turn the region into a completely free trade area by 2018, two
years earlier than the deadline set by the broader Asia-Pacific
Economic Cooperation (APEC) grouping.
ASEAN leaders decided at a summit in Hanoi last December to
put 90 percent of all intra-ASEAN trade within the zero to five
percent tariff range by next year.