United States International Trade Commission ASEAN: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries Investigation No. 332-511 USITC Publication 4176 August 2010 U.S. International Trade Commission COMMISSIONERS Deanna Tanner Okun, Chairman Charlotte R. Lane Daniel R. Pearson Shara L. Aranoff Irving A. Williamson Dean A. Pinkert Robert B. Koopman Acting Director of Operations Karen Laney Director, Office of Industries Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov ASEAN: Regional Trends in Economic Integration, Export Competitiveness, and Inbound Investment for Selected Industries Investigation No. 332-511 Publication 4176 August 2010 This report was prepared principally by the Office of Industries Project Leader John Fry [email protected] Deputy Project Leader Vincent Honnold [email protected] Office of Industries Brian Allen, Renee Berry, Laura Bloodgood, Samantha Brady, John Fry, Alberto Goetzl, Vince Honnold, Cathy Jabara, Jackie Jones, Deb McNay, and Matthew Reisman Office of Economics Joanne Guth Primary Reviewers Kate Linton and Walker Pollard Administrative Support Monica Reed Under the direction of Michael Anderson, Chief Advanced Technology & Machinery Division Abstract This report describes trends in regional integration, export competitiveness, and inbound investment for six industries within the Association of Southeast Asian Nations (ASEAN): computer components, cotton woven apparel, hardwood plywood and flooring, healthcare services, motor vehicle parts, and palm oil. The six profiled industries are a subset of 12 priority sectors that ASEAN members identified in 2004 in order to promote regional integration. The members created a regional “Roadmap for Integration” (Roadmap) for each priority sector, and while these Roadmaps have promoted tariff reductions and streamlined certain administrative procedures, their success in promoting regional integration has been mixed. In general, economic factors and national government policies have had more influence than the Roadmaps over regional industrial structures. ASEAN members tend to view each other as competitors for inbound investment and jobs, and the members have no legally binding means to enforce compliance with the objectives of the Roadmaps. The ease of importing and exporting varies widely among ASEAN members. Procedures for trading are relatively easy to complete in Singapore, Thailand, and Malaysia, but very difficult in Laos and Cambodia. The ASEAN Single Window (ASW) is ASEAN’s most visible effort to facilitate trade among members. By enabling the rapid exchange of standardized data among members’ customs agencies, it has the potential to bolster trade and support the emergence of intraregional supply chains. However, development of the ASW has proceeded slowly. The quality of logistics services—such as customs brokerage, freight forwarding, and express delivery—also varies substantially from member to member. Logistics services are world-class in Singapore but poor in Laos, Cambodia, and Burma. In a number of ASEAN countries, restrictive regulations hamper the delivery of high-quality logistics services. While large gaps persist among ASEAN members in e-commerce proficiency, the last decade has seen improvements throughout the region. Vietnam, in particular, has made significant progress in both e-commerce infrastructure development and legal reform. The ASEAN Secretariat has expressed a strong commitment to supporting wider adoption of e-commerce in the region and helping members to adopt new e-commerce laws, but has contributed less significantly to e-commerce infrastructure development. i CONTENTS Page Abstract ................................................................................................................................... i Acronyms ............................................................................................................................... ix Executive summary ........................................................................................................ xiii Chapter 1 Introduction ............................................................................................... 1-1 Purpose, scope, and organization of the report ....................................................................... 1-1 Definitions .............................................................................................................................. 1-2 Economic integration ...................................................................................................... 1-2 Export competitiveness ................................................................................................... 1-3 Inbound investment ......................................................................................................... 1-5 Trade facilitation, logistics services, and e-commerce .................................................... 1-7 Information sources ................................................................................................................ 1-7 Bibliography ........................................................................................................................... 1-9 Chapter 2 ASEAN and selected regional trends and improvements ..................................................................................................................... 2-1 Introduction to ASEAN .......................................................................................................... 2-1 ASEAN trends in economic integration, export competitiveness, and inbound investment ............................................................................................................ 2-9 Economic integration ...................................................................................................... 2-9 Export competitiveness ................................................................................................... 2-15 Inbound investment ......................................................................................................... 2-18 Regional improvements in trade facilitation, logistics services, and e-commerce ................. 2-22 Trade facilitation ............................................................................................................. 2-22 Logistics services ............................................................................................................ 2-26 E-commerce ..................................................................................................................... 2-29 Bibliography ........................................................................................................................... 2-33 Chapter 3 Electronics: Computer components ..................................... 3-1 Electronics overview .............................................................................................................. 3-1 Computer components ............................................................................................................ 3-2 Key findings ........................................................................................................................ 3-2 Background ......................................................................................................................... 3-3 Regional integration, export competitiveness, and inbound investment ............................. 3-5 Trade facilitation, logistics services, and e-commerce ....................................................... 3-16 Bibliography ........................................................................................................................... 3-19 Chapter 4 Textiles and apparel: Cotton woven apparel ................ 4-1 Textiles and apparel overview ................................................................................................ 4-1 Cotton woven apparel ............................................................................................................. 4-3 Key findings ........................................................................................................................ 4-3 Background ......................................................................................................................... 4-5 Regional integration, export competitiveness, and inbound investment ............................. 4-6 Trade facilitation, logistics services, and e-commerce ....................................................... 4-16 Bibliography ........................................................................................................................... 4-18 iii CONTENTS―Continued Page Chapter 5 Wood-based products: Hardwood plywood and flooring.............................................................................................................................. 5-1 Wood-based products overview ............................................................................................. 5-1 Hardwood plywood and flooring ........................................................................................... 5-2 Key findings ........................................................................................................................ 5-2 Background ........................................................................................................................