TUESDAY, AUGUST 8, 2017 SPECIAL

AEC: A COMMUNITY OF OPPORTUNITIES

PARTNERING FOR CHANGE, ENGAGING THE WORLD 2 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES

MESSAGE FROM PRIME MINISTER DATUK SERI A great economic promise

IRST and foremost, I would like In December 2015, during ’s growing faster than most of the rest of the to congratulate the International chairmanship of Asean, the Asean world, and it is expected that by 2050, the Trade and Industry Ministry for community was established, comprising Asean economy will reach US$9.2 trillion, Ftaking the initiative to collaborate the Asean Political-Security Community, making it the fourth largest in the world. with the private sector in the publication the Asean Economic Community and the For the Asean Community to be real, of the Asean @ 50 special pullout. Asean Socio-Cultural Community. it must be something that is part of our This year marks the 50th anniversary Malaysia’s tenure as the Asean chair lives. It must be something that touches of Asean since its establishment on Aug also witnessed the adoption of the Asean the rakyat’s hearts. Asean must be 8, 1967. Community Vision 2025 and its pillars’ seen as a source of cohesion, solidarity, Asean was built on a foundation of blueprints, namely the Asean Political- support, unity, friendship, strength and prosperity when it was established 50 Security Community Blueprint 2025, the greater prosperity. years ago. Indeed, in those 50 years, Asean Economic Community Blueprint As we celebrate a half century of Asean has made great strides. 2025 and the Asean Socio-Cultural Asean, what better way for us to do that Since its inception, many initiatives Community Blueprint 2025. than working towards making economic have been taken to deepen regional The harmony between Southeast integration efforts a reality. economic integration to make Asean a Asia’s nations has allowed for resources Then we can begin to make the next 50 single market and production base. to be focused on bringing economic years of Asean a fulfillment of that sense Between 1975 and last year, for benefits to our people, including of promise that our first five decades have instance, the Asean economy multiplied Malaysia, consolidating regional stability led us to. significantly from US$87.2 billion to and staying true to the vision of Asean’s There is so much to look forward to US$2.55 trillion. With a GDP of US$2.55 founding fathers. in Asean, this region of great economic trillion, collectively Asean is the sixth We have achieved a critical mass to promise. Together, the promise will be largest economy in the world. take us forward. Our economies are fulfilled.

MESSAGE FROM INTERNATIONAL TRADE AND INDUSTRY MINISTER DATUK SERI Asean will continue to rise

THE year 2017 started with a high pro- two decades. and good regulatory practice (GRP). spect for Asean. The economic development of These areas will be the key enablers After eight years of preparation, Asean, which has a population of 630 for Asean to increase its competitive Asean leaders launched the ambitious million people, has grown rapidly and edge in moving the region up the global Asean Economic Community (AEC) in registered a strong gross domestic value chain into higher technology and 2015, a treaty aimed at creating a single, product (GDP) growth of between 4.6 knowledge-intensive manufacturing seamless production base and consu- per cent and 7.6 per cent from 2010 to and services industries. mer market. last year. Where there is optimism, therein The work, however, does not stop This year’s GDP growth is expected lies the challenge. Most of all, non-tariff there as Asean today is more connec- to be 4.8 per cent, much better than the barriers and measures, or NTBs and ted than ever. growth forecast for many countries. NTMs, must be reduced and ultimately The Asean Economic Community With a record US$2.4 trillion GDP in removed. (AEC) Blueprint 2025 outlines measu- 2015, Asean is the third largest econo- This is a stubborn worldwide prob- res that will be taken by Asean in the my in Asia and the sixth largest econo- lem, but it is in Asean’s own interests to next 10 years to broaden and deepen my in the world. lead the way in this endeavour. economic integration, with a shared Investments in Asean are at an all- For Asean to reach that target eco- vision of creating a truly economic inte- time high. Foreign direct investment in nomic total of US$9.2 trillion, NTBs and grated region. Asean achieved a double-digit growth of NTMs have to be reduced by at least 50 This year also marks the 50th anni- 11.5 per cent compound annual growth percent and coordinated efforts are versary of Asean with the theme “Part- rate from 2005 to 2015. required to deal with this problem. nering for Change, Engaging the World”. Research houses have expressed Many people are looking at China Since it was founded 50 years ago, confidence that Asean could be the and India as the next economic pow- Asean has evolved into one of the fourth largest single market in the erhouses in Asia, but the world will world’s most dynamic regions with world by 2050, after the European Uni- continue to observe the rise of Asean. accelerated economic performance in on, the United States and China. Let us together celebrate this golden recent years. Several new key growth areas have jubilee of Asean that is indeed a commu- That has been attributed to Asean’s been identified and will be the focus nity of opportunities not only for Asean economic cooperation and integration for Asean in the next 10 years, namely people, but also for people outside the initiatives taking shape over the past e-commerce, global value chain (GVC), region. NewStraitsTimes • TUESDAY, AUGUST 8, 2017 3

AEC: A COMMUNITY OF OPPORTUNITIES

MESSAGE FROM FOREIGN MINISTER DATUK SERI

SEAN has come a long way to become what it is today. Fifty years ago, what began Aas a group of five nations coming together to preserve regional Proud to be peace, has now become a family of 10 nations of varied identity, cultures and religions, yet embracing the same ideals of shared cooperation for peace and mutual prosperity. After 50 years, Throughout the years, Asean has Asean citizens been a platform for integration and Asean is doing very cooperation. constructively to global developments. well. The formation The 10 member states have worked At its heart lies the people. The of the Asean Economic with each other and with other nations Asean Community Vision 2025, with to promote unity, development and its goals of being people-oriented Community (AEC) in sustainability. The spirit of friendship and people-centred, must not remain 2015 has definitely has allowed us to resolve disputes and a hollow rhetoric. brought tangible benefits problems peacefully so that we could All of us in Malaysia, as well as our move forward together as a region. friends in nine other member states, to Malaysia and the Looking back, it is without doubt have a duty to realise this aspiration. world. It has also led that Asean is a success story. Asean The next part of this voyage will be to the narrowing of has demonstrated impressive growth for the people to be involved in Asean, and remarkable progress. to comprehend and appreciate what development gap and Asean’s average annual growth Asean has done for them. promoted equitable over the last decade is 6 per cent, It is our sincere hope that the development in the compared with the global average people can understand and feel the of 4 per cent. Asean’s projected to benefits of Asean so that they may region that improved become the world’s fourth-largest participate in Asean community- the overall wellbeing single market by 2030. building processes. and quality of life of the This has resulted in our people We want people to be proud to say living better lives, enjoying better that “saya warga Asean”, or “I am a people in the region. quality products and services, as well citizen of Asean”. as earning higher incomes. On this occasion, I would like to DATUK SERI Our most recent milestone was commend the International Trade and International Trade and the establishment of the Asean Industry Ministry for its initiative to Industry Minister II Community in 2015. have this special pullout in conjunction The Asean Community aspires to with the golden jubilee of Asean. unite and leverage the resources and On behalf of the Foreign Ministry, expertise available within and to strive I am proud of the collaboration with for the collective good of the people the International Trade and Industry of Asean. and Tourism and Culture ministries The need to stand collectively as a in driving the Asean agenda at the community cannot be stressed hard global player, bringing greater with dialogue partners, strengthen national level. enough. economic development and wealth to engagement with external parties and Together with other stakeholders, I As a group, Asean can capitalise the region, including to Malaysia. reach out to new potential partners believe this is a positive step in making on its economic strength, pooling its As Asean becomes a regional for mutually beneficial relations, Asean a people-centred, people- resources to become a competitive player, it could deepen its cooperation as well as respond collectively and oriented community.

MESSAGE FROM TOURISM MINISTER The Asean DATUK SERI Economic Community (AEC) has attracted the attention of global investors who are Cultural programmes seeing Asean as one of the regional markets with huge potential boost ties and providing these investors preferential networks of markets S the national focal point for well as capacity building and human ties for us to learn and enjoy each other’s the Asean Socio-Cultural development. culture, heritage and tradition. globally. Today, Asean Community (ASCC) pillar, the The ASCC pillar, through its 15 In addition to this, the role of culture as is host to over 25,000 ATourism and Culture Ministry sectoral bodies, gives priority to a factor for social and economic growth foreign companies from is honoured to join the commemorative improving the economy and standard is seen with the increased number of celebration of this remarkable of living of the target groups. As a tourists, residents and investors taking the European Union, the milestone, Asean @50, marking 50 result, ASCC initiatives have given part in cultural activities and festivals, United States, Japan, years of diplomatic relations and Asean a better quality of life and and the rapid development of culture China, South Korea, friendship among Asean countries. economic development. industries. 2017 is a significant year for Asean, As the relevant ministry for the Asean To this point, I believe that the 50th India, Australia, New which turns half a century old. Ministers Responsible for Culture and anniversary of Asean will create more Zealand and others. ASCC focuses on the progressive Arts, the growing cultural cooperation awareness among youth about the development of Asean in various areas and exchange programmes fosters ties importance of understanding each DATUK , of cooperation among Asean member among the people of Asean based on the other‘s culture and diversity. Deputy minister (trade), states (AMS), such as rural development principle of mutual respect. I appreciate the opportunity given International Trade and and poverty eradication, social welfare, For instance, cultural exchange pro- to us to witness and experience this Industry Ministry health, environmental sustainability as grammes will provide more opportuni- celebration. 4 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES On track to become fourth largest economy

Micro, Small- and Medium- scale Enterprises (MSMEs) account for the largest number of International Trade and Industry Minister Datuk Seri Mustapa Mohamed (left) with counterparts at the 48th Asean Economic Ministers meeting enterprises operating Vientiane, Laos last year. in Asean. Some of these enterprises DATUK SERI MUSTAPA MOHAMED panies, but also for small- and medium- of Malaysia’s total exports is to Asean AEC, however, is far from perfect. scale enterprises. countries, while imports consisted of 25 Non-tariff barriers and non-transpa- are benefiting from E celebrate the 50th year Today, Asean is host to more than per cent last year. rent procedures, the need to comply the establishment of of Asean’s establishment 25,000 companies from the European From January to May this year, with national standards and rules and with pride. It has achieved Union, the United States, Japan, China, trade with Asean climbed 25.6 per cent regulations are among the obstacles or the Asean Economic remarkable economic and Korea, India, Australia and New Zeal- at RM197.97 billion compared with the challenges faced by companies in doing Community (AEC) and W corresponding period in 2015. social progress through economic inte- and. business. gration, political, security and socio- Almost all global MNCs have their This is a reflection that Asean Businesses have to look at AEC as a from the preferential cultural cooperation. operations in the region. remains a lucrative and growing market process and work in progress as bar- treatment obtained Collectively, Asean is the sixth lar- Regional integration offered the- for Malaysian companies. riers will continue to be reduced over gest economy in the world with a com- se investors an enormous integrated Many companies, including SMEs, time. under Asean free trade bined gross domestic product (GDP) of market, which has expanded from 355 are exporting products — ranging from A new AEC 2025 Blueprint with 500 agreements. US$2.6 trillion. million people in 1995 to 630 million toothpaste to sophisticated and high- action lines has been adopted to deepen Its average GDP per capita rose people in 2015, with 65 per cent of the technology products, such as auto parts, integration and boost Asean’s competi- DATUK from US$955 between 1996 and 2001 population below 35. components for the oil and gas sector, tiveness as well as to forge a cohesive Deputy minister (industry), to US$1,863 (2002 to 2009) and to Multinational corporations as well electrical and electronic products, and economy to ensure Asean remains on International Trade and US$3,818 (2010 to 2015). as Asean companies big and small processed food — to the region. the path of growth. Industry Ministry Since 1993, the average growth rate continue to expand in the region, with Malaysia has also emerged among The path to rapid development of the has been 4.7 per cent. Some Asean investments in manufacturing and the the top 10 investing nations with busi- region has not been smooth or without countries are now posting growth rates services sector. nesses that were initially concentrated challenges. exceeding 6 per cent, despite the sub- The top Asean companies are major in the manufacturing sector before it Asean has had to overcome the chal- dued global economy. investors in infrastructure projects became more diversified. lenges posed by the 1997 financial crisis, Japan, South Korea, India, Australia and Now the fourth largest labour mar- (ports, airports, road and rail), telecom- Investments in the services sector which led to devaluation of currencies, New Zealand from 2004 to 2010. ket in the world with a population of munications, financial, plantations, real are also becoming more dominant. drop in asset prices, closure of busines- This move promoted confidence in 630 million people, Asean is projected estate and distribution (retail and who- Many local banks, telecommunication ses, and later, the 2008 global economic investors and businesses in the regi- to rank as the fourth-largest economy lesale), and they compete with foreign and companies and airlines have a regi- crisis. on. It offered them preferential market in the world by 2050. companies. onal presence in Asean. In 2003, it was agreed for Asean to access to these countries. It has created the emergence of a Asean has been one of the major Malaysian construction firms have deepen economic integration with the Asean is taking the lead to negotiate middle class of around 100 million and beneficiaries among developing coun- been awarded projects to build toll formation of the Asean Economic Com- the world’s largest FTA with these six growing, making Asean a lucrative con- tries for foreign direct investments. roads, hotels, regional administrative munity (AEC). countries to form the Regional Compre- sumer market for global sellers. Foreign direct investment in Asean capitals and also build and manage AEC was established to accelerate hensive Economic Partnership agree- Economic integration began with the increased from US$23.54 billion in 1995 airports. economic growth, boost trade develop- ment. Asean Free Trade Area (Afta) in 1993 and to US$96.72 billion last year, a more than There is a growing number of Malay- ment in the region, and allow the freer Negotiations are ongoing and when grew with the Asean Economic Commu- four-fold increase. sian companies that have regional foot- movement of goods, services, skilled concluded and implemented, will crea- nity (AEC). Total trade increased nearly six- prints. Besides the large players, many labour and capital. te the largest integrated market of 3.5 Attractive investment incentives and fold since the beginning of Afta, from Malaysian SMEs also have investments Afta became the turning point billion people. economic reforms pursued by member US$430 billion in 1993 to US$2.55 tril- in the region. towards rapid economic transformation Asean can look back with pride that states spurred the grouping into beco- lion last year, while intra-Asean trade It is estimated that there are more of the region, culminating in the esta- it has come a long way in realising the ming one of the most dynamic business surged by more than six-fold in the same than 1,500 Malaysian companies ope- blishment and realisation of the Asean goals of the 1967 Bangkok Declaration. and investment hubs in Asia Pacific. period from US$82 billion to US$521.7 rating in Asean. Economic Community (AEC) at the 27th It is no longer a loose organisation The removal of barriers to trade and billion. The country is also benefiting from Asean Summit in in 2015. but one that has evolved to become investments, open skies and other trade Malaysia is one of the major bene- investments from traditional source It also provided Asean a stronger a permanent and stronger regional initiatives pursued by Asean as part of ficiaries of AEC with more than a one- countries, such as Singapore, Indonesia, voice in dealing with trading partners. grouping with the adoption of the Asean AEC have made the region more attrac- quarter, or 28 per cent, of the country’s the Philippines and Thailand. AEC became also the driving force in Charter, providing it with a definitive tive to the flow of foreign investments, trade with Afta valued at RM402.65 Continuous improvements in the fostering integration in Asia. legal framework for further integration. capital, technology and skilled people. billion last year compared with RM57.9 business environment in the region Asean widened its reach to engage It has opened up opportunities, not billion in 1993. offer ample opportunities for Malaysi- major trading partners in free trade The writer is international trade and only for multinationals and large com- It was also noted that 29 per cent an companies. agreements (FTAs), namely, China, industry minister NewStraitsTimes • TUESDAY, AUGUST 8, 2017 5

AEC: A COMMUNITY OF OPPORTUNITIES

July 1997 December 1997 Lao PDR and Myanmar joined Asean. The Asean Vision 2020 was adopted, envisioned a peaceful, stable, prosperous and December 1997 MILESTONES First meeting of Asean Plus Three was held. close-knit region with an active partnership and supporting community. April 1999 OF ASEAN December 1997 Cambodia joined Asean. First Asean-China Summit October 2003 convened in Malaysia. Asean issued the Declaration of Asean Concord II (Bali treaty 2) identifying November 2002 the objective of establishing and Asean Community with three key pillars September 1978 Asean and China signed the Declaration of Asean Political-Security Community (APSC), the Asean Economic First Asean-European Economic Community on the Conduct of Parties in the East Sea. Community (AEC) and the Asean Socio-Cultural Community (ASCC). Ministerial Meeting was held in Brussels. December 2005 September 2005 The First East Asia Summit (EAS) was held in Malaysia with January 1984 Asean established the Centre for participation from Asean member nations, China, Japan, This year sees Brunei Darussalam joined Asean. Biodiversity. South Korea, India, Australia and New Zealand. ASEAN @50 ASEAN celebrate its 50th anniversary and there is indeed 1967 1977 1987 1997 2007 2017 much to celebrate in terms of our collective achievements. Just as Aug 8, 1967 November 2007 January 1992 November 2007 importantly, the 50th Asean was established with Asean adopted the Asean Asean signed the Framework Asean Charter was signed, creating a legal Indonesia, Malaysia, Philippines, Economic Community Blueprint. anniversary is also a Agreement on enhancing Asean foundation and institution framework for Singapore and Thailand July 1993 economic cooperation and the October 2009 strengthening the regional connectivity and for the Asean Regional moment to think about November 1971 agreement on Asean Free Trade Asean Intergovernmental establishment of the Asean Community in 2015. Forum (ARF) was Declaration of the Zone of Area (AFTA). Commission of Human Rights was the future of the region Peace, Freedom and Neutrality established. March 2009 July 1994 established. (ZOPFAN) was signed between Asean adopted the Asean Political-Security Blueprint and what lies ahead First Asean member states. October 2010 and Socio-Cultural Community Blueprint Regional Forum July 1995 Master Plan on Asean for us as a strong, February 1976 was held. Vietnam joined Connectivity was adopted. October 2010 First Asean Summit convenes in Asean. First Asean Children’s Forum was held. growing community. Indonesia. Members signed the December 1995 Asean signed the Southeast November 2015 Declaration of Asean Concord Asean Community Vision 2025 was adopted. November 2012 TAN SRI JAMALUDIN IBRAHIM, (Bali Declaration 1) and Treaty of Asian Nuclear Weapon-Free Asean Human Rights Declaration was adopted. Amity and Cooperation Zone Treaty (SEANWFZ). President and Group Chief December 2015 Executive of Axiata Asean Community was established on Dec 31, 2015 6 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES

DATUK SERI J. JAYASIRI CONOMIC integration is AEC the beginning of an ongoing process in any regional grouping. As such, Ethe establishment of the Asean Economic Community in 2015 is not economic integration the end but rather the beginning of economic integration in region. In 2014, an Asean Coordinating AEC 2025 comprises five interrelated the centre of development through an Committee Working Group at senior and mutually reinforcing characteristics, inclusive approach. officials’ level was set up and chaired which outline the vision for integration In other words, regional integration by Malaysia to develop the post-2015 as follows: must benefit all levels of people, with Lion Group is regional integration blueprint. A HIGHLY integrated and cohesive no group or groups of people or sub- proud to be part With the cooperation of all 10 economy; regions or areas excluded. members, the Asean Community (AC) A COMPETITIVE, innovative and Vital to the integration is the of Malaysia 2025 Blueprint was formulated and dynamic Asean; promotion and development of micro, and Asean with one launched at the 27th Asean Summit in ENHANCED connectivity and small- and medium-scale enterprises common vision to Kuala Lumpur in 2015. sectoral cooperation; (MSMEs), which account for more than promote progress and AC 2025 included the blueprints A RESILIENT, inclusive, people- 95 per cent of enterprises in the region. for the three core pillars of Asean: oriented and people-centred region; Senior economic officials have development, and peace political-security community, economic and, developed a Consolidated Strategic and stability in the community and socio-cultural A GLOBAL Asean. Action Plan (CSAP) to translate the region. We can tap on community. The overall goal is that new measures measures outlined in AEC 2025 into The AEC 2025 Blueprint was prepared must be taken to improve, broaden and action lines for implementation until the strengths of Asean after the review of the implementation of deepen integration of Asean to remain 2025. with its 600 million the AEC 2015 Blueprint and the findings competitive and sustain growth. CSAP has more than 500 action lines population, cross-border and recommendations of two studies Datuk Seri J.Jayasiri Under the new blueprint, growth and covering the 150 over measures outlined undertaken by the Economic Research the dynamism of Asean as an economic in the blueprint and provides greater policies that facilitate Institute of East Asia and Asean and comprehensive in scope and coverage entity is expected to be generated or transparency and certainty to investors free flow of trade and the Rajaratnam School of International for economic integration and it is more sustained through robust productivity and businesses on liberalisation and inter-regional trade Studies. ambitious than the previous plan. growth, innovation, leveraging facilitation measures to be implemented AEC 2025 also considered proposals The overall vision is to build on the information, communication technology, over the next 10 years. agreements with other put forward by the Asean Business earlier vision of a single market and adjusting to industry 4.0 technologies, Among the steps to be taken are: countries/regions. Advisory Council and other corporate production base to create a highly human resources development and COMPLETE elimination of tariffs panels and stakeholders within and integrated and cohesive economy that strengthening Asean’s global economic and to reduce and eliminate border and TAN SRI WILLIAM CHENG outside the region. can drive growth in the region over the engagement. behind-the-border regulatory barriers Lion Group Executive Chairman The AEC 2025 Blueprint is more next 10 years. Its main thrust is to put people in ›› Turn to Page 7 8 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES

(From left) Singaporean Prime Minister Lee Hsien Loong, Thai Prime Minister Prayuth Chan-ocha, Vietnamese Prime Minister Nguyen Tan Dung, Laotian Prime Minister Thongsing Thammavong, Malaysian Prime Minister Datuk Seri Najib Razak, Myanmar President U Thein Sein, Sultan of Brunei Sultan Hassanal Bolkiah, Cambodian Prime Minister Hun Sen, Indonesian President Joko Widodo and Philippine President Benigno Aquino III at the opening of the 26th Asean Summit 2015 at the Kuala Lumpur Convention Centre. PIC BY GHAZALI KORI

Asean foreign ministers at the government guest house near Bangkok, Thailand. (From left) Thai Foreign Minister Tun Thanat Khoman, Indonesian Foreign Minister Adam Malik, Philippine Foreign Minister Narciso Ramos, Malaysian Foreign Minister Tun Abdul Razak Hussein and Singaporean Foreign Minister S. Rajaratnam.

A general view of the Second Asean Heads of Government summit with the five Asean heads of states and governments at their seats on the raised dais facing more than 500 delegates and distinguished guests gathered for the opening ceremony in Kuala Lumpur on Aug 5, 1977. Seated at the main table are the delegates from Indonesia, the Philippines, Singapore, Thailand and Malaysia.

The signing of the Asean Declaration (Bangkok Declaration) by the founding fathers of Asean, namely Indonesia, Malaysia, the Philippines, Singapore and Thailand on Aug 8, 1967 United States President Barack Obama speaking at the Asean Business and Investment Summit in Bangkok, on Nov 21, 2015, in Kuala Lumpur. Thailand. NewStraitsTimes • TUESDAY, AUGUST 8, 2017 9 10 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES RCEP helps Asean make its mark globally

DATUK ISHAM ISHAK scale industries into the regional and global supply chain, while also susta- The full N the back of increasingly ining and promoting economic growth implementation demanding and competitive in the region. international trade, Asean More significantly, it comprises of the AEC will Ohas very little choice but to countries that are growing rapidly with provide the country maximise the interconnectivity among GDP rates of more than 5 per cent. members. India, China and eight Asean mem- with greater Besides deepening economic inte- ber states are forecasted to post GDP opportunities to gration among the 10 member states, growth of between 4 and 8 per cent last invest and engage one of the core elements of the Asean year. Economic Community (AEC) is to integ- Likewise, five of the eight Asean with the Asean rate the region and thrusting it into the member states are expected to grow community as we heart of the global economy. beyond 6 per cent. Negotiating economic partnership Asean is forecasted to grow by 5.1 continue to work agreements (CEPs) and free trade per cent from this year to 2021, while hard to improve agreements with major trading partners China and India are expected to grow connectivity in the has been one of the initiatives adopted by 6 per cent and 7.3 per cent during by Asean, most recently in AEC 2025 the same period. region and boost and previously through its economic RCEP is thus a significant FTA that tourism and trade blueprint. provides impetus for growth to the From an economic standpoint, Asean region. in Asean. The most is generally dependent on trade and for- In the long run, it shall also provide a convenient way to eign direct investments. solid foundation for Asean to consolida- move around Asean This has resulted in its members te its free trade agreements with Aus- pursuing open and outward-looking tralia China, Japan, South Korea, India is by air, given that economic policies. and New Zealand, as well as addressing we live in places Interestingly, trade contributes more the concerns of businesses requiring to than 94 per cent of Asean’s gross dome- meet multiple sets of rules to benefit separated by large stic product (GDP). from the FTA. bodies of water, Following the 1997 financial crisis, A cornerstone of RCEP is to ensure as well as being Asean recognised the importance of a leap towards promoting trade open- boosting cooperation with other fast- ness by reducing barriers to trade and home to the two growing economies in East Asia: China, Minister of International Trade and Industry (MITI) Datuk Seri Mustapa investments. largest archipelago Japan and South Korea. Mohamed chairing the 3rd Regional Comprehensive Economic Partnership It is expected to transform the Subsequently, these Asean+3 pro- (RCEP) Ministrial Meeting at Kuala Lumpur Convention Centre (KLCC). region’s economic landscape and sub- nations in the world cesses were institutionalised into a PIC BY ASYRAF HAMZAH ject countries in the region to global — Indonesia and formal mechanism. trade rules. the Philippines. An East Asia Vision Group (EAVG) movement of natural persons and other Apart from covering 50 per cent of was established and one of the recom- trade-related aspects. the global population, RCEP accounts The challenge has mendations made by EAVG was to fos- Tariffs or important duties have been for one third of the global output and always been to ter closer economic linkages between substantially eliminated under these 28.3 per cent of the global trade. Asean and the three countries. FTAs. Collectively, Asean and the six coun- provide affordable Asean economic ministers were As of last month, 93.2 per cent of tries accounted for 60.4 per cent of air transportation, engaging economic ministers from the import duties have been abolished Asean’s global trade and 51.6 per cent and AirAsia has lived these partner countries on annual con- under the Asean-China FTA; Asean- of its FDI flows. sultations. Japan FTA (90 per cent); Asean-South The other major trading partners of up to our promise so Eventually, trade and economic work Korea (90 per cent); Asean-India (79 per Asean are the European Union and the far and achieving the programmes were developed with the- cent); and Asean-Australia-New Zeal- United States, which accounted for 10 se countries to forge closer economic and FTA (92 per cent). per cent and 9.3 per cent of its trade. full implementation partnerships. In other words, Asean has extensive The principles and objectives for of AEC will be the An expert group was then establis- preferential market access for exports negotiating RCEP are based on three catalyst for a new hed to explore the feasibility of an East to these countries, and similarly, those goals: Asia Free Trade Area (Eafta), comprising countries have preferential access to FIRSTLY, RCEP aims to have a chapter of not only Asean and the three countries. Asean states. broader and deeper engagement, with air travel but also the At the same time, another expert In 2012, Asean’s trade with the six significant improvements over Asean+1 group was also founded to look into the Datuk Isham Ishak countries totalled US$862.3 billion, or FTA; general economy in viability of creating an Asean+6 FTA that 34.9 per cent of Asean’s global trade. SECONDLY, RCEP must recognise Asean. comprises Asean, China, Japan, South force in 2005, followed by the Asean- These countries also emerged as the individual and diverse circumstan- Korea, India, Australia and New Zeal- South Korea FTA in 2007, Asean-Japan major investors in Asean and collec- ces of participating countries; and, AIREEN OMAR, and. Comprehensive Economic Partnership tively, they accounted for 47.5 per cent of FINALLY, including provisions to CEO of AirAsia Bhd While Eafta and Asean+6 feasibility Agreement in 2008, Asean-India FTA in the total foreign direct investment flows facilitate trade and investment and to studies were ongoing, economic minis- 2010 and Asean-Australia-New Zealand to Asean, amounting to US$51.4 billion. boost transparency in trade and invest- ters had recommended that deeper FTA in 2010. In November 2013, Asean and the ment relations between participating Notwithstanding some of these economic integration could be formed The FTAs with China, Japan, South leaders of the six countries formally countries, as well as to help participa- narratives, and in true Asian spirit, the through individual FTAs with the six Korea and India started with the agree- started negotiations for the Regional ting countries’ engagement in global early conclusion of RCEP in whatever countries or through Asean+1 FTA. ments on trade in goods, and subse- Comprehensive Economic Partnership and regional supply chains. form shall be a significant milestone to Thus, between 2002 and 2009, Asean quently, Asean negotiated the services (RCEP) agreement. Overall, RCEP is indeed value- Asia, as it makes its mark as the prima- negotiated CEPs/FTAs with China, and investment agreements with these RCEP is targeted at contributing to adding to Asean+1 FTA that contribu- ry growth engine of the global economy. Japan, South Korea, India, Australia countries. the expansion in trade and investments, tes to strengthening regional integra- and New Zealand. Asean’s FTA with Australia and New closing development gaps, boosting tion and, at the same time, promoting The writer is deputy secretary-general The first FTA negotiated by Asean Zealand was even more comprehensive, economic connectivity, integrating com- companies in the region to be locked (trade), International Trade and Indus- was with China, which entered into covering goods, services, investment, panies, especially small- and medium- into the global supply chain. try Ministry NewStraitsTimes • TUESDAY, AUGUST 8, 2017 11

AEC: A COMMUNITY OF OPPORTUNITIES Consult Asean youth on the future they want

TAN SRI DR MOHD MUNIR Intra-regional trade and investment by 20 per cent. ABDUL MAJID have also grown. While not at EU The way Asean works is not going Nestlé remains (European Union) levels, intra-Asean to fulfil any of these requirements any bullish on the O have existed for 50 years is trade comprised the largest share of time soon and Asean is not going to be a Asean region. no mean achievement. In the Asean’s total trade, at a quarter of the single production base that it puts itself period from 1967 when it was whole. Intra-Asean FDI (foreign direct out to be. It will not achieve the future The AseanEconomic Testablished, Asean negotiated investment) is second only to the EU in size it frequently advertises. It will be Community (AEC) through the peak and aftermath of 2014, having risen by over 60 per cent sub-optimal. enhances market the Vietnam War, and consolidated its over the previous seven years. It could be argued it was better to regional position by admitting former There are a number of ways of be sub-optimal and survive than to go integration and greater communist enemy and marginal looking at these positive developments, for it and break up. However, if Asean connectivity for a more Southeast Asian states to membership but they come down to the question does not change in the way it makes conducive business before the end of the 20th century. whether they are good or not good decisions, very consensually and slowly, environment. Malaysia The foundation and structures of enough. Those supporting the case for there already are a couple of global regional peace, stability and cooperation Asean’s slow and steady approach point developments which could cause it to is a key market in Asean have been well laid starting with the TAC to the progress that has been made and be a historical memory. and AEC opens up (Treaty of Amity and Cooperation) in argue that it is because of this approach In terms of economic integration greater opportunities for 1976. Asean has grown to be the seventh that the diverse member states of Asean particularly, we have noted Asean’s largest in the world, with the prospect of have held together, unlike the rushed Tan Sri Dr Mohd Munir commendable progress. Nestlé Malaysia, as the being the fourth largest by 2050, if not and formalistic course taken by other Abdul Majid Indeed the way Asean economic Group’s largest Halal earlier. regional organisations, including the ministers especially have worked producer and region’s The incremental moves towards EU, which has resulted in desultory define the future. towards this end is notable. They economic cooperation culminated in gains and/or in membership distress. The prime conditions are reduction recognised the Asean Business Advisory key exporter. pronouncement of the AEC (Asean Asean may be 50, which is a fine of non-tariff barriers (which have been Council as the apex organisation to Economic Community) at the end of achievement. However it cannot increasing rather than coming down), coordinate private sector views and ALOIS HOFBAUER, 2015. Even if yet to be fulfilled, AEC is a continue in the way it has done in the final reduction of tariffs to zero and a inputs in the AEC 2025 Blueprint. Chief Executive Officer, Nestlé Malaysia significant milestone in Asean’s history. past in a fast changing world that will reduction in intra-Asean export costs ›› Turn to Page 12 12 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES

›› From Page 11 In fact, the consultation with the private China’s rise will affect sector that has been put in place is a form of democratisation in a kind of functional integration. This is good structural decision- making progress, but the rate of gain Asean cohesion against the issues of the day is not sufficient to fulfil the promises of with only four Asean members (Brunei, the economy - not just e-commerce, need to give those for whom that future Muhibbah entered the AEC or the sweeping economic Malaysia, Singapore and Vietnam) set but robotics, Internet-of-Things, belongs a voice in addressing them and challenges presented by geopolitical to join. Artificial Intelligence — will have a to suggest what future they want for the Asean market and technological change. China’s BRI (Belt and Road sweeping impact on Asean economies, Asean, how they want Asean to operate. 25 years ago. The rise of China will have an impact Initiative), while improving intra-Asean particularly the MSME sector. While we need the voice of experience Today, Muhibbah’s on Asean cohesion and on its centrality. connectivity, will also spawn new lines of The most consequential outcome as well to discuss with them afterwards Economically, Asean may not develop communication, whether a revival from will be displacement of employment. the future they may propose, we must presence is in the export into the AEC as envisaged, however historic times or not. A study in Malaysia puts the probability allow the younger population (Asean of services and capital fast or slowly. China’s economic and financial factor of displacement in unskilled and boasts a youthful population of 60 per goods namely cranes Different member countries are muscle exercised in individual Asean semi-skilled employment at around 0.8. cent under 35 years of age), to have their pulled towards China’s economic pole countries can have outcomes adversely This means that Asean states looking say. and waste heat recovery in different ways. Cambodia and, to a affecting regional integration as planned to attract investment in manufacturing, We need an Asean Youth Council units. Muhibbah also lesser extent, Laos, are very China- and, indeed, affect different Asean for instance, because of their low cost (presided by an experienced Asean undertakes construction centric. Already the CLMV (Cambodia, economies in different ways. of labour, like Indonesia and Myanmar, hand, such as a respected former Laos, Myanmar and Vietnam) countries, The point is, China’s rise, in economic may not have their employment and secretary-general of the secretariat) and concession for plus Thailand, are in an economic terms alone, will shake up easy economic growth plans fulfilled. comprising up to 10 from each member Airport Operations. development orbit with Yunan and assumptions about Asean integration This means economic disparities country to discuss and come up with Asean is an economic Guangxi. in the coming years. among Asean countries could widen and proposals on the Asean they want in This region, with a combined When its economic dominance cause strains on regional cohesion, as the future they see. community and offers population of 400 million (against Asean inevitably expresses itself in a those further up the digital curve pull Their proposals should be made opportunities in a total of 625 million), has a GDP half of commanding way in the political-military away. public. They could perhaps begin their market worth US$2.6 Asean’s and is growing at well above sphere, there will be a differently-paced For those struggling with the new work in Asean’s 51st year in 2018. Asean’s average growth rate, with very rush by Asean member states towards economy, the social and political cost The Asean of the future may not trillion and population of strong sub-regional economic linkages. association or alliance with China, of a large pool of unemployed will be according to script. A very different more than 600 million. Had the TPP (Trans-Pacific depending to an extent on how present find an outlet in protectionism that world beckons. It is better to have a Partnership) materialised, there would and credible America is in the region at could reverse the process of Asean relevant Asean than one living in the MAC NGAN BOON have been another mix and configuration that time. integration. past, however commendable that past Managing Director, Muhibbah of economic, and political relationships This is not all. The digitisation of The challenges ahead are huge. We may have been. Engineering (M) Bhd

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AEC: A COMMUNITY OF OPPORTUNITIES Boosting SMEs in digital economy

DATUK MICHAEL KANG SMEs will have more alternatives to information, and the Asean Solutions traditional financing. Marrybrown is for Investments, Services and Trade The growing importance of fortunate to be HE Asean Economic Community (Assist), a non-binding and consultative e-commerce in the region is part of (AEC) materialised on Jan 1 mechanism for the expedited and acknowledged by Asean leaders, and Asean last year, marking a huge step effective solution of operational that measures have been taken under Economic Community Tforward for Asean countries problems encountered by Asean- the framework of AEC to speed up the with access to 12 in terms of trade liberalisation and based enterprises on cross-border integration of SMEs into the digital countries’ 600 million integration. issues related to the implementation economy. At the core of Asean’s commitment of economic agreements. The establishment of the Asean consumers. to market integration is trade The implementation of these Coordinating Committee on Electronic Our professional team facilitation, and the Asean Economic measures is encouraging, as they Commerce is to set out the roadmap is able to move freely to Ministers adopted the Asean Trade would reduce the costs of compliance and programmes on e-commerce. Facilitation Framework, which set the due to complexities of international This initiative is expected to boost the 6 countries that target to reduce 10 per cent of trade trade for small- and medium-scale cross-border trade and capitalise on a we are operating in transaction costs by 2020. enterprises (SMEs). more digitally connected Asean. and the opportunities Several measures for trade The easy access to information With the success of these initiatives, facilitation have been put in place. and consultative mechanism, offered we would foresee the formation of a are endless. Due to free One of these is the Asean Trade by these platforms, will help SMEs to highly integrated and cohesive Asean trade flows, we see a Repository, a one-stop online database gather information and understanding Datuk Michael Kang e-trade platform that encompasses significant interest in our on Asean trade- and customs-related in the planning for export and cross- physical and digital infrastructure that information, where the public can border investment at affordable costs. This institutional set-up promotes facilitates the single market vision. brand in Asean. access information on national trade Another measure for strengthening financial inclusion and ensures greater This marks a good opportunity DATIN NANCY LIEW, repositories. SMEs’ ability in financing is the adoption access to financing for MSMEs. for Malaysia’s SMEs to take the Founder & Group Other measures include the of Asean Institutional Framework on When the institutional framework is lead in making Malaysia the hub in Managing Director, Asean tariff finder, a cost-free search Access to Finance for MSMEs (Micro, fully translated into practical measures e-commerce for Asean. Marrybrown Sdn. Bhd. engine for tariff and tariff-related Small- and Medium-scale Enterprises). at national level, it is expected that ›› Turn to Page 14

YEARS AND BEYOND 1917 - 2017

UMW CORPORATION SDN. BHD. (009825-V) 14 NewStraitsTimes • TUESDAY, AUGUST 8, 2017

AEC: A COMMUNITY OF OPPORTUNITIES Helping SMEs maximise opportunities

›› From Page 13

The launch of the world’s first digital free trade zone (DFTZ) in Malaysia, which serves as a regional e-fulfillment centre and the regional hub for SMEs and marketplaces, will give Malaysia’s SMEs a comparative advantage in Asean is not penetrating the AEC market. Entrepreneur just a story of With the operations of DFTZ in Latifah Ab regionalism. It October, it would offer a conducive Rahman with environment for SMEs to access her Squeeze is a successful model markets outside Malaysia. Neat juice drink of integration and According to last year’s report by product at the cooperation which have Google and Temasek, it is anticipated Asean Young that the digital economy in Southeast Entrepreneur’s helped companies create Asia would be worth US$200 billion and Carnival greater operational the e-commerce market would reach 2016 held at efficiency and become US$88 billion by 2025. Matrade. PIC BY The driving factors behind the SADDAM YUSOFF more competitive in the anticipated growth include a growing global marketplace. young regional population, growth of e-commerce. building programmes for SMEs. The next step for Malaysian SMEs We look forward to the Internet and its services, growth These SMEs have been accumulating The programmes should focus on is to maximise opportunities. Asean capitalizing on further of Internet users, a rapidly growing experiences and strengths in mastering assisting SMEs to boost value-add by leaders in the public and private sectors middle class, and a lack of organised the technologies and skills, and they are taking a comprehensive approach, should work hand in hand to reach out growth here through retail. well prepared to gain a foothold in AEC that is, developing entrepreneurial to Asean SMEs. the recently established E-commerce is on its way to by capitalising on their comparative skills, improving branding, adopting Long-term and consistent measures AseanEconomic becoming an important economic advantages. technology such as IoT and e-commerce should be introduced to SMEs to scale sector, with more and more SMEs In view that many SMEs are in production, management and up SMEs participation and to scale Community. adopting this new business model in lagging behind in mastering skills and marketing, increasing productivity down on remaining barriers. Malaysia. knowledge on digital economy, we through automation and skill training AZHAR ABDULLAH, It’s estimated that about 10 per propose that the government work with for workers, boosting quality of goods The writer is national president, Managing director, cent of Malaysian SMEs are involved in trade associations to set up capacity- and services by attaining certification. SME Association of Malaysia Schlumberger Malaysia.

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AEC: A COMMUNITY OF OPPORTUNITIES Free trade agreements with dialogue partners

INDIA AT the 2nd Asean-India Summit in 2003, the leaders signed the Asean- JAPAN India Framework Agreement on Comprehensive Economic Cooperation ASEAN and Japan signed the Asean- SOUTH KOREA as a basis for the establishment of an Japan Comprehensive Economic Asean-India Free Trade Area (FTA). The Partnership (AJCEP) on April 14, 2008. THE Framework Agreement on Asean-India Trade in Goods Agreement CHINA The agreement entered into force on AUSTRALIA AND Comprehensive Economic Cooperation (AITIGA) entered into force on Jan 1, Dec 1, 2008. AJCEP (Goods) was fully between Asean and the South Korea 2010. The Asean-India Trade in Services THE Asean-China Framework realised by Asean-6 (Brunei, Indonesia, NEW ZEALAND was signed in Kuala Lumpur on Dec Agreement (AITISA) was signed on Agreement on Comprehensive Malaysia, the Philippines, Singapore, 13, 2005. To achieve the objectives Nov 13, 2014, and entered into force Economic Cooperation was signed in and Thailand) and Japan in 2015 when ECONOMIC ministers of Asean, of the Framework Agreement, the on July 1 , 2015, for six Asean member November 2002 to establish the Asean- tariffs on substantially all products have Australia and New Zealand signed Asean-Korea Trade in Goods (AKTIG) states, namely Brunei, Malaysia, China Free Trade Agreement (ACFTA). been eliminated. the AANZFTA Agreement on Feb 27, Agreement was signed on Aug 24, 2006 Myanmar, Singapore, Thailand, and ACFTA came into force on Jan 1, 2010, The negotiations on trade in 2009, in Thailand. It is Asean’s first and took effect in 2007. Meanwhile, the Vietnam, as well as India. The and fully realised on Jan 1, 2015. services, including the Financial and comprehensive FTA negotiations with Asean-South Korea Trade in Services agreement has also entered into The “Protocol to Amend Telecommunication annexes and dialogue partners covering all sectors, Agreement was signed on Nov 21, 2007, force for Laos and the Philippines the Framework Agreement on Movement of Natural Persons (MNP) i.e. trade in goods; investment; and came into force on May 1, 2009, and on Sept 15, 2015 and Dec 6, 2016. Comprehensive Economic Cooperation Chapters, as well as the investment trade in services; financial services; the Asean-South Korea Investment The Asean-India Investment Agreement and Certain Agreements thereunder negotiation have been concluded. Asean telecommunications; electronic Agreement was signed onJune 2, 2009 (AIIA) was signed on Nov 12, 2014, and between Asean and China” (ACFTA and Japan are finalising the protocol commerce; movement of natural and took full effect on Sept 1, 2009. entered into force on July 1, 2015, for Upgraded Protocol) was signed on Nov to amend the AJCEP Agreement to persons; intellectual property; Subsequently, the Asean-South Korea six Asean member states, namely 21, 2015 and entered into force on July incorporate the Chapters on Trade in competition policy; and economic Free Trade Area (AKFTA) came into Brunei, Malaysia, Myanmar, Singapore, 1 last year. The upgraded protocol is Services, Movement of Natural Persons cooperation. effect on Jan 1, 2010. Thailand, and Vietnam, as well as India. expected to bring Asean and China closer (MNP), and Investment. The protocol is AANZFTA is a comprehensive At the Asean-South Korea The agreement has also entered into to realising their twin goals of two-way targeted to be signed at the end of this and single-undertaking free trade Commemorative Summit, the leaders force for the Philippines on March 17 trade and investment of US$1 trillion and year. agreement that opens up and creates agreed to target US$200 billion of two- last year. US$150 billion respectively by 2020. Japan is Asean’s third largest trading new opportunities for 660 million way trade volume by 2020. The total The signing of the AITIGA on Aug 13, China continued to be Asean’s largest partner and the second largest source people of Asean, Australia and New value of Asean and the South Korea 2009 in Bangkok paves the way for the trading partner with total bilateral trade of foreign direct investment (FDI). Last Zealand. Total trade between Asean two-way trade reached US$125.1 creation of one of the world’s largest at US$ 355.1 billion last year, accounting year, two-way trade between Asean and Australia and New Zealand billion last year making South Korea free trade areas (FTA) with almost 1.8 for 15.2 per cent of Asean’s total trade. and Japan reached US$221.7 billion, grew to US$53.8 billion last year, the fifth largest trading partner of billion people and a combined GDP Foreign Direct Investment (FDI) flows accounting for 10 per cent of Asean’s accounting for 2.4 per cent of Asean’s Asean. Foreign direct investment flow of US$4.5 trillion. Last year, the total from China to Asean amounted to total trade. FDI inflows from Japan to total trade. Foreign direct investment from South Korea to Asean grew to merchandise trade reached US$56.4 US$9.2 billion last year, positioning Asean was valued at US$14 billion and flows from Australia and New Zealand US$6.1 billion last year. This makes billion. During the same period, foreign China as Asean’s fourth largest source accounted for 14.5 per cent of total FDI to Asean amounted to US$3 billion last South Korea the 5th largest investment direct investments flows from India to of FDI. inflows to Asean. year. partner of Asean. Asean reached US$1 billion. UNDER NEGOTIATIONS

RCEP HONG KONG THE Regional Comprehensive Economic Partnership (RCEP) negotiation was launched in November ASEAN agreed to pursue a free trade agreement (FTA) with Hong Kong at the 19th Asean Economic 2012. The 16 participating countries are the 10 Asean nations, Australia, China, Japan, South Korea, Ministers’ (AEM) retreat on March 8, 2013, in Hanoi, Vietnam. The negotiations commenced in July India and New Zealand. 2014. RCEP is an Asean driven initiative that aims to integrate economically the 16 countries in Asia and Hong Kong was Asean’s seventh largest trading partner in 2015. As a group, Asean was Hong Oceania countries. The Leaders of the 16 RCEP participating countries agreed that RCEP shall involve Kong’s second largest trading partner in 2015, after China. Total trade between Asean and Hong Kong broader and deeper engagement with significant improvements over Asean free trade agreements reached US$ 90.2 billion in 2016 or 4 per cent of Asean’s total trade. Total foreign direct investment (FTAs) and comprehensive economic partnership agreements (CEPs) with these countries. (FDI) flows from Hong Kong to Asean amounted to US$9.6 billion or 10 per cent of Asean’s total FDI RCEP accounts for 50 per cent of the world population (3.53 million), 30.4 per cent of world GDP in the same year. (US$22.5 trillion), $28.7 of world trade (US$9,547.2 billion) and 30.6 per cent of the world output (US$22.4 Since China launched its economic reform and open door policies in 1978, Hong Kong has become trillion). Total trade of RCEP last year was significant at US$9.6 trillion and total FDI inflows to the 16 the premier gateway into and out of China for international trade and investment across Asia and countries amounting to US$120 billion. the world, including Asean.