ASEAN will not achieve 100 per cent integration, says S'pore PM Lee

SINGAPORE - Achieving the ASEAN Economic Community (AEC) will depend on the political will of member states, said Singaporean Prime Minister Lee Hsien Loong, admitting that measures such as trade liberalisation and reducing non-tariff barriers are "politically difficult" for emerging economies to implement.

Speaking to reporters at his office on Tuesday, the prime minister said ASEAN will not achieve 100 per cent of economic integration measures by the deadline of December 2015, but that countries should see this as an urgent priority.

"You are talking about deepening the integration, meaning reaching agreements on rules for investments, rules for services, rules for non-tariff barriers to market access, rules for movements of professionals," he said.

"These are in various ways politically sensitive things to do and it depends on how high a priority the governments put on this, especially when general elections or presidential elections are coming."

ASEAN countries have pledged to merge their economies into a single market by the end of 2015 by promoting free movement of goods, investment, services and manpower. Tariffs and non-tariff barriers are being pushed down and are supposed to be eliminated eventually.

However, less developed ASEAN economies such as Myanmar, Cambodia and Laos rely heavily on tariffs for government revenue and maintain protectionist trade policies.

"Every country will have certain sensitive industries and certain sensitive products and it is a political judgment," said Lee. "How far you want to go for economic integration and efficiency and how far you want to protect these sensitive products."

Citing the example of the proposed open skies policy to allow airlines greater connectivity between Southeast Asian cities, the prime minister said government-subsidised national airlines may resent competition and lose out if such a policy is implemented.

Speaking in Thailand yesterday, former Malaysian Prime Minister Mahathir Mohamad said Singapore is the only ASEAN country that is completely ready for economic integration and that some of the group's poorer members should be allowed to retain their economic protections. Most ASEAN members - the exceptions being Singapore and Brunei - are middle or low-income countries, he said.

"ASEAN members have ratified 75 per cent of agreements to form the community, but that is not enough. It needed to do more to push forward integration. The group should allow free movement of professional workers across borders, otherwise integration will not happen," said Mahathir.