Asean told: Invest internally

DA NANG, Vietnam—Economies of the Association of Southeast Asian Nations (Asean) need to “take a risk” in investing among themselves, particularly in small and medium enterprises (SMEs), in order to build resilience and create a vibrant single-market economy by 2015, said Asean Secretary-General Dr. Surin Pitsuwan.

Pitsuwan said the global economy, which is reeling from the impact of the financial turmoil, remains “fragile” and Asean members should build resilience from within.

At the same time, Vietnam has admitted that less-developed members of Asean are beginning to take the bitter pill of engaging with the global economic dragon, China, after the Asean-China free-trade area agreement took effect in January.

“The heart of the Asean growth was the stimulus packages [infused by governments during the global financial crisis],” Surin said, adding that the “challenge is for Asean to formulate and implement solutions to further enhance our investment climate, so that we may continue to attract and retain foreign direct investments [FDI] during uncertain times.”

He added: “Nationally, Asean member-states need to further improve [their] competitiveness and, collectively, all member-states need to project Asean as a truly integrated market.”

Asean’s total merchandise trade declined by 19 percent from $1.89 billion in 2008 to $1.52 billion in 2009. Of this amount, Surin said only 25 percent is traded among the 10 member-countries.

“That portion [referring to intra-Asean trade] must be increased at least up to 30 percent to 35 percent before the Asean single-market goal by 2015. Asean members should take a risk in investing in their neighbors, particularly in the SME and information technology and communication sectors,” said Surin.

Dr. Vu Huy Hoang, Vietnam’s minister of Industry and Trade and chairman of the concluded 42nd Asean Economic Ministers meeting (AEM), admitted that Asean “was negatively impacted” by China’s growth, prompting officials to discuss how various sectors can live up to the competition.

Economic ministers of Asean and China who met on Thursday said the global financial crisis resulted in the 9.5-percent decline of Asean trade with China from $196.9 billion in 2008 to $178.2 billion in 2009.

Also as a result of the crisis, China’s trade with Asean declined by 7.8 percent in 2009, from $231.1 billion in 2008 to $213 billion in 2009.

In a joint statement, economic ministers of China and Asean noted that “the crisis had affected FDI flows from China to Asean with a decline of 28.4 percent from $2.1 billion in 2008 to $1.5 billion in 2009.”

FDI flows from China to Asean also suffered a slight decline of 7.6 percent from $2.5 billion in 2008 to $2.3 billion in 2009.

The Asean-China free-trade area took effect on January 1, with tariffs removed on almost 97 percent of products in Asean-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Indonesia) and China in the normal track.

But Hoang admitted that “worries emerged” following the implementation of the free-trade deal with Asean, particularly on less-developed members like Vietnam, Laos, Cambodia and Burma/Myanmar.

Although the four members are set to commit tariff reduction in later stage, Hoang said they now face difficulties in adjusting to administrative procedures and eliminating technical barriers to trade. –Estrella Torres / Reporter, BUsinessmirror