Call to Asean states: Clear non-tariff barriers soon

Member states have been urged to get rid of any remaining obstacles before the ASEAN Economic Community (AEC) gets going at the end of this year.

Trade and Industry Minister Lim Hng Kiang said yesterday that while progress has been made since the AEC blueprint was drawn up in 1997, issues such as removing non-tariff and service trade barriers have lagged.

He told the ASEAN Conference 2015: "We know that many of you who operate in ASEAN face problems at and behind the borders. You grapple with Customs processes, documentation requirements and a complex regulatory framework.

"ASEAN countries need to be more proactive to tackle the problems… and move towards the elimination of non-tariff barriers."

The AEC is envisioned as a fully integrated economy with capital and goods moving freely between the 10 ASEAN members.

Tariffs on exports of ASEAN-originating products between member states have already been removed but businesses investing across the region continue to face non-tariff issues such as convoluted licensing and land acquisition requirements.

There are also significant barriers to the flow of services, with companies facing various foreign equity restrictions in all ASEAN countries.

Service trade policies in ASEAN are more restrictive than in any other region except the Persian Gulf, a World Bank report said last month.

Mr Lim also noted that the ASEAN open skies agreements have still not been ratified.

"Strong air connectivity is necessary to promote greater investment. It is imperative that we complete the ratifications."

Mr Idris Jala, Malaysia's Minister in the Prime Minister's Department, agreed that the road towards a fully integrated AEC is still mired in challenges.

"The 30,000-feet, high-level policies are good, but there are a lot of problems in translating these policies to implementation on the ground," he said.

Mr Jala added that Malaysia, which chairs ASEAN this year, is proposing an AEC pathfinder programme where companies can meet regional regulators to resolve specific issues in closed-door workshops co-paid by governments.

Despite the various challenges, the Singapore Government has made the AEC's formation a high priority, given the region's population of 620 million and combined gross domestic product of US$2.3 trillion (S$3.07 trillion).

ASEAN's growth is projected to be 5.4 per cent annually from now until 2018, according to an Organisation for Economic Cooperation and Development report last year.

Some individual nations are doing even better, with Vietnam, Indonesia and the Philippines recording annual growth rates of around 6 per cent.

"As a small country, Singapore has limited resources and relies heavily on trade with our partners, especially within the region.

"With its rising middle class, ASEAN will also become an increasingly key final demand market for Singapore," Mr Lim said at the one-day conference focused on ASEAN growth opportunities.

"We believe that a free and open regional and global economy is important, and we are confident that ASEAN will be able to fulfil most of the 2015 targets."

whwong@sph.com.sg

This article was first published on May 21, 2015.
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