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Date [ 2014-05-19, 06:23 ]

How will the country fare in this coming trade bloc?


(Kuala Lumpur=Koreanpress) RamaniRathir =What is AEC? : AEC stands for the ASEAN Economic Community which comprises 10 nations in Southeast Asia. The goal of establishing AEC is to transform the region into a single market and production base with a highly competitive advantage to make it a stable and prosperous region. The 10 ASEAN member countries comprise Brunei Darulssalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, The Philippines, Thailand, Singapore and Vietnam.

As ASEAN, it has the land, population and potential to achieve strong economic growth, akin to the European Union. At the 12th ASEAN Summit in January 2007, the leaders of the 10 ASEAN member countries agreed to hasten the establishment of the AEC by 2015.

The characteristics and elements of AEC are as follows:
In each of the core element, there are action plans with specific timelines.

These are a single market and production base which will entail free flow of goods, services, investment, capital and skilled labour. Priority will be given to the food, agricultural and forestry sectors.

Among the issues set to be examined are those on trade competition policies, consumer protection, intellectual property rights, infrastructure development, e-commerce and taxation. SME developments will fall under the purview of Equitable Economic Development. Integration will take in ASEAN and Global relations.

The progress of AEC can be illustrated as follows:

For the period from January 2008 till March 2013, approximately 80% of AEC initiatives have been implemented. This has led to elimination of duties across ASEAN countries and also liberalization of services sector through a single duty free integrated market. Enjoying this status are business, communication, education, distribution, financial, health, environmental, tourism, travel, transport, recreational, cultural, sporting, construction, engineering and other services. On top of that, other sectors such as ICT, Energy and Minerals are expected to be liberalized come 2015.

In view of the coming AEC by 2015, Malaysia had gradually begun to liberalise its services sector since 2009 which allowed up to 100% foreign participation in the services sector.

On top of the 27 services sub-sectors which were liberalized in 2009, additional 18 services sub-sectors have been further liberalized in 2012 while architectural, engineering and quantity surveying services are in progress to be liberalized.

Benefits of the AEC

It will open up opportunities for more regional co-operation and will improve the scale efficiencies, dynamism and competitiveness of ASEAN members. AEC will enable easier movement of goods, services, investment, capital and people. Ultimately, it will offer new ways of coordinating supply chains, or access to new markets for established products and enhance economic growth.

With AEC, all ASEAN countries will be an important investment destination to foreign investors with access to a larger regional market of nearly 600 million people (size of ASEAN population) and an increasing middle class population. The ASEAN Free Trade Agreement will be expanded to zero tariffs on almost all goods by 2015. ASEAN plans to remain engaged with the global economy through regional level free trade agreements. Today, ASEAN has such agreements with China, Japan, Korea, India, Australia and New Zealand.

The United States International Trade Commission (‘USITC) report on ASEAN stated: Regional Trends in Economic Integration, Export Competitiveness and Inbound Investment for Selected Industries.  It noted that AEC is coming at a time when it is recognized that investment in emerging markets is more desirable than in the US and Europe. ‘There will be no shortage of funding coming from within ASEAN, the Asia Pacific or even the US and Europe. These investments can bring about badly needed capital for some ASEAN countries, allowing them to leapfrog from the 20th century into the 21st century in terms of competition in mature countries such as Thailand and Malaysia,’ said the report.

As a small country in ASEAN, Malaysia has much potential to tap onto the larger ASEAN market and play a crucial role as part of the supply chain in manufacturing and services. Malaysia’s political stability and good infrastructure and connectivity will offer strong value propositions to foreign investors looking to base in ASEAN for the growing Asian market.

Some Areas of Opportunities

Tourism

More Asians are travelling in the region and there is an increase of travelers from other countries outside ASEAN and that have begun to reach out to Asia as new visitors. The trends were evident at the recent Hub City Forum held by the Pacific Asia Tourism Association (Pata) where more than 100 travel industry executives discussed the tourism potential and government spending to upgrade facilities both for leisure attractions like museums and also MICE facilities such as convention centers. MICE tourism opportunities are particularly large with ASEAN offering the added component of an ‘exotic destination.’

Internationalisation of Healthcare

Linked closely with tourism opportunities is the liberalisation of healthcare services in ASEAN countries. ASEAN countries especially Thailand and Singapore are fast becoming destination for healthcare tourism. Patients are now travelling from one country to another, seeking better healthcare at lower cost. The legal and licensing frame-works still needed to be worked out.

Malaysia is already tapping onto the healthcare tourism segment with the setting up of the Malaysia Healthcare Travel Council. Its multinational corporations in healthcare such as Ramsay Sime Darby, KPJ and IHH (Gleneagles) are already expanding to ASEAN and beyond.

The American organization, International Living placed Malaysia as the third best country for tourism healthcare on a worldwide basis.

Professional Services

Tan Sri Sulaiman Mahbob, Chairman Malaysian Institute of Economic Research, cited in his paper en titled ‘Promoting Professional Services in the Economy’ the following:

With commitment to liberalise services, there is good potential for the growth of the services sectors to turn Malaysia into a high income nation. Mode 4 liberalization (of his paper) is confined to movement of professionals and progress has been achieved in the Mutual Recognition Agreements (MRAs) of the following professional services:
-    Engineering, architecture, surveyors
-    Nursing, medical practitioners, dental practitioners
-    Accountancy services

While there may be concern on the possible movement of Malaysians to other ASEAN countries with AEC, the possibility of professionals from ASEAN moving into Malaysia and other more developed ASEAN countries is higher. The inflow of professionals with high skills and expertise will help build a foundation to help transform the Malaysia economy into a high quality tradable services economy.

In the final analysis, AEC’s potential will have the most impact on ASEAN’s less developed members such as Cambodia, Vietnam, Laos and Indonesia.

abc@koreanpress.net

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