ASEAN economic integration poised to advance

Finance Ministers from Asean nations met in Hanoi this week to plan further steps toward economic integration.

In their meeting ahead of the 16th Asean Leaders Summit, they pledged to implement the proposed Asean Trade in Goods Agreement (ATIGA) by May 2010, and the Asean Comprehensive Investment Agreement (ACIA) by October.

The agreements are designed to facilitate the free flow of goods, services, labor and investment across the region. Six nations have already eliminated tariffs on 99.5% of tariff lines, while the 'CLMV' countries (Cambodia, Laos, Myanmar & Vietnam) have reduced tariffs to around 0.5% on 98.86% of tariff lines, with a view to complete elimination by 2015.

If all goes well, these moves will bring the region closer to the dream of a fully-integrated Asean Economic Community.

Plans to integrate economies have been progressing smoothly in the past decade. Since 2000, Asean intra-trade has tripled, rising from US$166.8 to $458.1. Between 2006 and 2008, foreign direct investment (FDI) from outside Asean rose 8.6%, while FDI within the organization rose 42.6% in the same period.

article & source: Business Times (Malaysia)

Indonesia to help industries affected by free trade agreement

Indonesia no longer plans to renegotiate the ASEAN free trade agreement with China (ACFTA) and will instead find ways to assist local industries most impacted by the change.

The powerful Indonesian Chamber of Commerce and Industry (Kadin), however, is still pushing for a delay in the implementation of ACFTA, claiming many manufacturers are not ready to compete with their Chinese counterparts.

Government assistance might take the form of loans and facilities for capacity building some industries. A working committee consiting of representatives from relevant business and economic ministries will also monitor trade developments between Indonesia and China, while China itself has promised "sustainable" and "balanced" trade, saying it will accept more imports from Indonesia should a trade surplus widen.

article & source: The Jakarta Globe

ASEAN's Free Trade Area: 2015 a 'stretch goal'?

A compromise by Thailand and the Philippines over rice tariffs has led to new optimism that ASEAN can indeed establish a regional Free Trade Area by 2015. But domestic interests, development gaps and the Myanmar issue still present obstacles.

Larger economies such as the USA and European Union now prefer to negotiate trade agreements with individual countries, rather than the bloc as a whole. A region-wide Free Trade Agreement with China came into effect on 1 January 2010, but is now being renegotiated with ASEAN's largest economy Indonesia, after pressure from domestic industries.

Economic gaps are obvious between member states such as Singapore and Laos. A successful Free Trade Area would also necessitate improvements in transport and financial infrastructure across borders, to ensure the free movement of capital, goods and people.

article & source: Business World