Worlwide economic slowdown top agenda at ASEAN Summit

Linda Yulisman, The Jakarta Post, Jakarta | Wed, 11/09/2011 9:20 AM A | A | A | - Klipping the Jakarta Post

The impact of the worldwide economic downturn on Southeast Asian countries will be one of the top issues during the 19th ASEAN Summit next week, an official says.

The Trade Ministry’s ASEAN cooperation director, Iman Pambagyo, said on Tuesday that the issue
would be highlighted during the upcoming high-level meeting, as ASEAN countries would be affected by the slump in Europe and the United States because of its inclusion in an increasingly integrated world economy.

ASEAN leaders and economic ministers will meet from Nov. 17 to 19 in Nusa Dua, Bali.

“During a recent ASEAN ministerial meeting in Manado [North Sulawesi], our partners — Japan, South Korea, China, India, Australia and New Zealand — agreed that ASEAN could play a role to boost cooperation aside from Europe and the US amid the threat of a second-round crisis,” Iman said.

Intra-ASEAN trade grew significantly in recent years, reaching US$470 billion in 2008, $376.2 billion in 2009 and $519.7 billion in 2010. Last year, this was equivalent to 25 percent of the ASEAN total trade worth $2.04 trillion with the rest of the world.

Iman said that apart from the agenda, Indonesia as ASEAN chair this year would again highlight the issue of inclusive and equitable development to support the establishment of ASEAN Economic Community (AEC) in 2015 by initiating a discussion on the importance of international remittances and the financial inclusion of small- and medium-sized enterprises, which make up more than 90 percent of the businesses in the region.

“We aim to develop small- and medium-sized enterprises in ASEAN and eradicate developmental gaps between member countries. To do this, we cannot keep doing business as usual,” Iman said.

Iman argued that strategic plans to foster small and medium-sized enterprises in ASEAN were not implemented well due to various problems such as a lack of support from financial institutions and an absence of institutions governing small- and medium-sized enterprises in several countries.

Indonesia previously offered a framework for equitable development as a guideline to be implemented by all institutions in the AEC to narrow the economic gaps.

Economic imbalance is one of the primary issues among ASEAN countries, as there are huge gaps between the most developed ASEAN states such as Singapore and other less-developed states such as Cambodia and Laos.

Singapore has a per capita GDP of more than US$37,000, while Cambodia and Laos have a per capita GDP of $700 and $980, respectively.

Iman said that, during the meeting, ASEAN members would also report on the implementation of the AEC blueprint and sign two protocols — the protocol of the second package of specific commitments under the ASEAN-China Trade of Services Agreement and the protocol to amend the ASEAN-Korea free trade agreement pertaining to goods.

The draft of the ASEAN-China agreement was agreed to in 2010 and had been in deliberations since 2007, but the signing was delayed because the Philippines had committed to improving and Thailand wanted to get domestic clearance.

The protocol would take effect once three members from the two parties agreed to implement it, Iman said.

The second protocol is meant to provide clear procedures for revising tariff removals and removing certain products from the sensitive list to a normal track.

The ASEAN Summit will also be the backdrop for a series of meetings, including meetings between ASEAN-Japan, ASEAN-Korea, ASEAN Plus 3, ASEAN-US and ASEAN-India, and will be conducted in line with other related meetings such as the ASEAN Investment Forum on Nov. 16 and ASEAN Business and Investment Summit on Nov. 17 and 18.

Key events of the 19th ASEAN Summit

Reports on the progress of the ASEAN Economic Community Council to ASEAN leaders, particularly on economic performance, challenges and recommendations
Discussion on equitable development toward the establishment of the ASEAN Economic Community in 2012
Exploration of a coherent approach to build external cooperation to make the region more integrated with the world’s economy
Signing a protocol on the second Package of Specific Commitments under the ASEAN-China Trade in Services Agreement
Signing the second protocol to amend an agreement on trade in goods under the framework agreement on closer economic cooperation among the governments of ASEAN and South Korea

ASEAN investment

Foreign direct investment (FDI) to the region reached about $76 billion last year — 10 percent of the total for all emerging markets and 5 percent globally. Around 40 percent of the FDI went to Singapore, 30 percent to Thailand and Malaysia, 14 percent to Indonesia and Vietnam, and the rest to the remaining five ASEAN members.