The Malaysian Insider

DEC 17 -Asean ministers have taken a giant step towards establishing a regional economic community similar to the European Union with the signing of three landmark agreements yesterday.

The deals involve agreements to improve the flow of goods between nations, reduce tariffs and boost the service sectors as well as commitments to enhance the investment climate across the region.

Economic ministers of Brunei, Cambodia, Indonesia, Laos, Malaysia and Singapore as well as Asean Secretary-General Surin Pitsuwan met at the new Crowne Plaza hotel at Changi Airport Terminal 3 for the signing.

Singapore"s Ministry of Trade and Industry (MTI) said the pacts are key steps towards achieving the first pillar of the Asean Economic Community (AEC). This would establish a single market across Asean.

"We organised this signing ceremony ...to show that for us, the Asean Economic Community blueprint is a very important process and Asean ministers believe that we should press on and not cause any delays," said Trade Minister Lim Hng Kiang. He added that the target is to get the AEC up and running by 2015.

The three agreements are wide-ranging and tackle key areas in the region's economies.

The Asean Trade in Goods Agreement aims to ease trade between member states by liberalising the flow of goods as well as making commitments to reduce tariff and non-tariff barriers.

Freeing up the services industry was tackled in the Asean Framework Agreement on Services. This details each member state"s commitment to fully liberalise its service sector by 2015.

The Asean Comprehensive Investment Agreement (Acia) is intended to improve the investment environment and trade by protecting investments to boost investor confidence and encouraging intra-region economic integration, among other measures.

Lim praised the updated Acia, saying: "The important advances in this update are that it covers not just Asean investors but also investors based in Asean countries, so this makes Asean more attractive to foreign investments."

He also stressed the importance of "pressing on" to ensure that Asean becomes an attractive investment region, especially given the economic crisis.

"Overall levels of investments will drop, there will be greater competition and different countries and regions will have to put forward their own value proposition and how attractive they are to investments," said Lim, who is the chairman of the Asean Economic Ministers.

He added that Asean"s selling point remains the fact that over the next five to 10 years, Asia will be the centre of growth.
"Within Asia, you can either invest in China or you can invest in Asean, and use Asean as a production base and supply to China, India and to GCC (Gulf Cooperation Council) countries," Lim added. "So we do offer a valuable proposition for foreign investors."

The Singapore Business Federation (SBF) and Singapore International Chamber of Commerce (SICC) agree and see the three agreements as a stepping stone towards establishing a stronger AEC.

In view of the global slowdown, SBF said the deals are timely as they will serve to enhance Asean"s attractiveness as a regional investment destination.

"This is especially so in the face of the value propositions posed by emerging economies like China and India," said SBF chief executive Teng Theng Dar.

SICC chief executive Phillip Overmyer added: "Asean as a coherent region is huge, comparable in size to the European Union and even larger than the United States...but without this integration, Asean will find itself far, far behind as markets like China and India take off.

"But this kind of agreement indicates that we are on the right track to make Asean a strong and competitive grouping ...on a scale where it is able to hold its own against India and China." -  The Straits Times